Forecasting Iraq’s Broad Money Supply for 2026–2030: Evidence from Box–Jenkins Models and Monetary Policy Implications

Abstract

This study forecasts Iraq’s monthly broad money supply (M2) from February 2026 to December 2030 using 265 observations covering January 2004–January 2026. M2 is modelled as an observed monetary aggregate rather than a structural money-demand function. Unit-root. stationarity diagnostics indicate non-stationarity in levels. support one ordinary difference: the Phillips–Perron Z(α) test strongly rejects the unit-root null after differencing (−226.863. p < 0.01). while KPSS does not reject stationarity (0.153. p > 0.10); ADF evidence is specification-sensitive. Monthly effects remain relevant, although OCSB indicates that seasonal differencing is unnecessary (D = 0). A transparent ARIMA/SARIMA candidate set is evaluated using AIC/BIC, residual diagnostics, a 37-month holdout, expanding-window one-step forecasts, and simple benchmarks. SARIMA(0,1,1)(0,0,1)₁₂ without drift is retained because it combines significant MA parameters, acceptable Ljung–Box diagnostics. the lowest fixed-holdout RMSE among diagnostically adequate parsimonious candidates (4,279.3 billion dinars) and the best expanding-window RMSE (2,043.4 billion dinars). slightly better than the random-walk benchmark (2,121.5). The central forecast remains near 169.3 trillion dinars. while uncertainty widens substantially; the December 2030 95% interval is approximately 134.5–204.2 trillion dinars. BDS rejects i.i.d. residuals, so the forecast is interpreted as a conditional linear baseline for liquidity monitoring, requiring uncertainty-aware apply and frequent re-estimation.Copyright© 2026 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.Article’s History: Received 9th of June, 2026; Revised 29th of July, 2026; Accepted 31st of August, 2026; Available online: 30th of September, 2026. Published as research article in the Volume XXI, Fall, Issue 4(94), 2026.