Analysis of the Effect of Hedging Against Exchange Price Fluctuations in the Electronic Window of the Central Bank of Iraq on the Tax Gap Index

Jebur, Hiba

doi:10.25673/123782

Proceedings of International Conference on Applied Innovation in IT · 2026/03/31 · Vol. 14 · Issue 1 · pp. 1603–1609

Analysis of the Effect of Hedging Against Exchange Price Fluctuations in the Electronic Window of the Central Bank of Iraq on the Tax Gap Index

Hiba Al-Mujbali and Shatha Abdul Hussein Jebur

📄 Download PDF DOI: 10.25673/123782

Abstract

This study investigates the impact of exchange rate risk management, proxied by hedging activities, on the tax gap index in Iraq over the period 2010–2018. Using annual macroeconomic data obtained from the Central Bank of Iraq and the Ministry of Planning, the research employs descriptive statistics, correlation analysis, and multiple regression techniques to examine the relationship between exchange rate fluctuations and fiscal sustainability indicators. The empirical results indicate a statistically significant relationship between hedging practices and the tax gap index, with hedging explaining approximately 31.5% of the variation in fiscal imbalance (R² = 0.315). Furthermore, the findings reveal that exchange rate risk management is significantly associated with key macroeconomic variables, including public expenditure, real interest rates, and economic growth. The study concludes that while hedging mechanisms contribute to reducing the adverse fiscal effects of exchange rate volatility, their impact is partial and operates within a broader macroeconomic framework. The results highlight the importance of integrating exchange rate stabilization policies with tax administration reforms to enhance fiscal sustainability in developing economies.

Keywords

Hedging Exchange Price Fluctuations Tax Gap Central Bank of Iraq.

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