Abstract
This research aims to investigate the oil price changes and their effects on the macroeconomic variables in Iraq for the period between 1990-2021. For this purpose, in this study, a Vector Error Correction model (VEC) is used to investigate the impact of oil price changes on macroeconomic variables including GDP, money supply, exchange rate, government size, and non-oil trade. Then, using instantaneous reaction functions, the reaction of macroeconomic variables in the event of a shock in the cost of crude oil has been studied. The findings of the research showed that although factors influencing oil prices have fluctuated the macroeconomic variables investigated in the research in the short term, they have ultimately led to the improvement of the economic situation of Iraq during the period under investigation.
