Analysis of the Evolution of the Consumption Function in the Iraqi Economy in Light of the Trends of the Leakage-Addition Gap for the Period (2004-2022)

Abstract

The study aimed to analyze the evolution of the consumption function in the Iraqi economy in light of the trends of the leakage-addition gap for the period (2004-2022). The research problem revolves around several questions, including the nature of the element gap, whether it affects the consumption function, and whether the consumption function responds to this effect. The research hypothesis posits that the element gap positively affects the consumption function in the Iraqi economy,The study reached several conclusions, the most important of which is the rentier nature of the Iraqi economy. The consumption function heavily relies on salaries and wages rather than income from productive sectors, leading to a high marginal propensity to consume. Despite the high imports in Iraq, the leakage elements were less than the addition elements throughout the study period. This is due to low income taxes and the low rate of savings caused by the absence of a savings culture among individuals,Therefore, it is suggested to raise awareness and guide the society in a way that enhances the savings culture to curb excessive and unnecessary consumption, ensuring an increase in the marginal propensity to save to a level of 40%. It is also necessary to activate the agricultural and industrial productive sectors to keep pace with the development in consumption, which relies on imports to meet this development, financed through oil exports.