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Hatim George Hatim *: the role of the exchange rate in determining the general level of prices and the problem of monetary policy in Iraq ** - PUBLISHED ON 03.13.2015 1. Summary This paper discusses the role of the Iraqi Central Bank's policy toward the Iraqi dinar exchange rate  In particular, cash and area in general, contain inflation and calm the rates of increase in the general level of prices, including believes the ultimate price stability.The paper explains that the heavy reliance of the Iraqi economy on imports makes the Iraqi dinar exchange one influential variables in the path of the general level of prices in Iraq as a laboratory, which turns whereby prices of imported goods to the local currency prices price. But success in calming the rates of increase in the general level of prices in recent years is not due only to decrease the rate of exchange (ie, improved value of the dinar measured in foreign currencies); but thanks in also to the large expansion in imports and thus in the commodity supply, which became possible by mutations in the large oil revenues and the demise of the blockade restrictions on Iraq. The paper shows that the control of the exchange rate is not sufficient in itself to contain inflation and to ensure price stability, also warns that the exchange rate is close to exhausting its potential in the course of the general level of prices of control, and that the large rise in aggregate demand resulting from the broad jumps government spending puts the economy on just around the corner or lower than the point at which you start the limited available capacities for the production of goods or semi-tradable, and in particular the infrastructure capacities, to impose severe restrictions on the expansion of commodity supply, which converts it to broadcast spots inflation in all aspects of the economy. Paper and go to the heavy reliance on oil revenues to finance government spending, take away a lot of monetary policy effectiveness in influencing aggregate demand and give fiscal policy a very important role in determining the path of macroeconomic variables, including the general level of prices.As the Iraqi Central Bank to focus on controlling the path of the exchange rate, and less on foreign exchange reserves, transforms the basic instruments of monetary policy, and the offer of cash and interest rates, to a subsidiary variables. To continue reading please download the full text of the research as a PDF ... Click here To download the statistical supplement as a PDF, click here (*) Iraqi economic researcher and an international consultant (**) Research published in the "Arab Economic Research Journal Nos. 59-60, Summer - Fall 2012 Please note that this version includes some minor adjustments to the published version in the" Arab Economic Research Journal. " Lead author of this paper would like to thank Dr. Mahdi and the entire House of Representatives, Dr. Nabil value their feedback on the first draft, and would like to emphasize at the same time full responsibility for all content of the paper from the shortcomings and loopholes. Margins  adopted in this paper on the conceptual frameworks and analytical tools for the theory of Keynesian in determining income / operating level and the interest rate and the money, and as expressed in accordance with the formula model Hicks Hansen ((Hicks-Hansen Model, which is referred to most often model IS-LM . a good explanation of the theory of Keynes in determining income and model Hicks Hansen wrote in a lot of macroeconomic, for example, are not limited to available: Dornbusch, Rudiger, Stanley Fischer and Richard Startz, Macroeconomics , 9 thEdition, McGraw Hill, Singapore in 2004.  known as the Iraqi dinar exchange rate in this study as the purchase of foreign currency price of the Iraqi dinar, any value of the Iraqi dinar and one unit of foreign currency. Accordingly, the value / price of the dinar foreign currency exchange rate improved landing and deteriorate Ptsaadh. It follows from the statistical tables published by the Central Bank on the exchange rate that adopts implicitly this definition of the exchange rate, see, for example, the table number (38) in the "Annual Statistical Bulletin 2012" issued by the General Directorate of Statistics and Research of the Central Bank of Iraq and the Table (1) in the Statistical Appendix . This definition Msatmd in numerous scientific studies, see, for example, but not limited to Catoa, Luis AV "Return to Basics: Why Exchange Rates," Finance and Development, September 2007, p. 48 But the most dependent known internationally at the present time is the inverse of the previous definition stipulates that the exchange rate is a foreign local currency or the price of one unit of local currency calculated or expressed in foreign currency, or words, explained that the currency amount Alahnbeh needed to buy one unit of currency See local Dornbusch, Roger, Stanley Fischer and Richard Startz. Macroeconomics , op. cit., p. 576. The following shows the reference motives behind the widespread use of the second definition in recent years Dunn, Robert M. Jr., and John H. Muttin. International Economics , London and New York: Routledge, 2000, p.3