Searching for the finance–growth nexus in Libya

Serhan Cevik and Mohammad H. Rahmati ()
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Mohammad H. Rahmati: Sharif University of Technology

Empirical Economics, 2020, vol. 58, issue 2, No 7, 567-581

Abstract: Abstract This paper investigates the causal relationship between financial development and economic growth in Libya during the period 1970–2016, providing new insights from a resource-dependent economy. The empirical results vary with estimation methodology and model specification, but indicate no 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, both the VAR- and ARDL-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 country’s hydrocarbon earnings.

Keywords: Financial development; Economic growth; Cointegration; Causality; VAR models (search for similar items in EconPapers)
JEL-codes: E31 O16 O55 O57 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Working Paper: Searching for the Finance-Growth Nexus in Libya (2013)
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DOI: 10.1007/s00181-018-1593-6

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