Searching for the Finance-Growth Nexus in Libya
AbstractThis paper investigates the causal relationship between financial development and economic growth in Libya during the period 1970â€“2010. The empirical results vary with estimation methodology and model specification, but indicate the lack of long-run relationship between financial intermediation and nonhydrocarbon output growth. The OLS estimation shows that financial development has a statistically significant negative effect on real nonhydrocarbon GDP per capita growth. However, the VAR-based estimations present statistically insignificant results, albeit still attaching a negative coefficient to financial intermediation. It appears that nonhydrocarbon economic activity depends largely on government spending, which is in turn determined by the countryâ€™s hydrocarbon earnings.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 13/92.
Date of creation: 01 May 2013
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