Asymmetric Effects of Macroeconomic Variables on Economic Growth in Libya and Its Relationship to Stagflation: An Econometric Study Using the NARDL Approach during the Period (2000-2023)
Keywords:
Asymmetric effects, economic growth, stagflation, NARDL model, LibyaAbstract
This study aims to analyze the asymmetric effects of macroeconomic variables on Economic Growth in Libya and Its Relationship to Stagflation during the period (2000-2023), using the NARDL methodology which allows for detecting nonlinear relationships in both the short and long run. The results show that the relationship between inflation and growth does not reflect a permanent structural stagflation, but rather oscillates between periods of "growflation" driven by high oil revenues and periods of "deflationary recession" associated with political and economic crises. The findings reveal clear asymmetry in the effects of variables, where positive inflation had a positive impact on growth in both periods, while the negative effect of negative inflation appeared only in the long run. High unemployment had a negative impact on growth, while its decline was associated with improved growth. Money supply showed notable asymmetry between the short run (negative) and long run (positive). Oil revenues showed a positive and significant impact on growth, while the parallel exchange rate had a negative impact in both periods. The study confirms that the Libyan economy is characterized by structural fragility, making it fluctuate between inflationary growth and deflationary recession rather than permanent stagflation. The study recommends directing oil revenue surpluses towards productive investments, improving monetary policy management, adopting gradual exchange rate reform, and coordinating fiscal and monetary policies to achieve macroeconomic stability.
Keywords: Asymmetric effects, economic growth, stagflation, NARDL model, Libya.
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