Long-run determinants of the real exchange rate in the Libyan economy

Document Type : Original Article

Author

Teaching Assistant, Faculty of Economics - Omar Al-Mukhtar University - Libya

Abstract

This study discusses the long-run determinants of the real exchange
rate of the Libyan dinar during the period 1980-2015 using the (Cointegration) and VECM model to estimate the long-run relationship between
the real exchange rate and its basic determinants. The results showed that the
real exchange rate of the Libyan dinar is positively affected by both trade
openness, monetary supply and affected negatively by economic growth and
government spending. And the study recommended the consideration of fiscal
and monetary policies that would diversify the productive apparatus and
improvement domestic exports, which would contribute to stabilizing the
Libyan Dinar exchange rate and raising the rates of growth and development 

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