The Impact of Monetary Expansion on Stagflation in the Libyan Economy: An Econometric Study Using Time Series Modeling

The Impact of Monetary Expansion on Stagflation in the Libyan Economy

Abstract

This study aims to analyze the relationship between monetary expansion and the phenomenon of stagflation in the Libyan economy over the period( 1980-2022). It adopts an econometric approach based on time series models, along with a composite interactive index that integrates inflation and economic growth. The findings reveal the existence of a long-run inverse relationship between money supply and stagflation, indicating the potential effectiveness of monetary policy in mitigating this phenomenon. The study also confirms the stability of the structural relationship between the variables despite economic shocks, while highlighting the importance of structural and political in explaining economic fluctuations in Libya.