The Role of Monetary Policy in Addressing Inflation in the Libyan EconomyAn Analytical Econometric Study for the Period (1990-2022)
DOI:
https://doi.org/10.54172/d20tjh66Keywords:
Monetary policy, Inflation, libyan economyAbstract
: This study aims to analyze and measure the role of monetary policy in addressing inflation in the Libyan economy during the period (1990–2022), considering the specificity of the Libyan economy based on oil rent and the profound political and institutional transformations it has undergone, especially after 2011.The study adopted a descriptive analytical approach to track the development of the economic variables under study, in addition to a quantitative econometric approach using the Autoregressive Distributed Lag (ARDL) model to measure the relationship between inflation and monetary policy tools, represented by money supply (M2) and the real exchange rate, with the inclusion of a dummy variable to capture the effect of political crises. The results showed the existence of a long-term equilibrium relationship between the variables, with variation in the strength and direction of the impact of monetary policy tools on inflation, reflecting the specificity of the Libyan economy and the weak effectiveness of monetary policy transmission mechanisms during periods of turmoil.
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