The business cycle in postwar Lebanon

Ghassan Dibeh

Journal of International Development, 2008, vol. 20, issue 2, 145-160

Abstract: The postwar business cycle in Lebanon was dominated by the exchange rate based stabilization (ERBS) program implemented by the successive postwar governments. In the early period 1993-2002, a boom-bust dynamics was generated during which the economy exhibited the well-documented stylised facts of ERBS programs. The paper develops a cyclical index (ci) for Lebanon during this period and a VAR model shows that real interest rates (rr) had a significant impact on the dynamics of the business cycle during the early ERBS period. The second period 2002-2005 was marked by a recovery generated by foreign aid given to Lebanon in the Paris II international donors' conference held in November 2002. The period ended in a recession in 2005 brought about by the assassination of Lebanon's ex-prime minister Rafic Hariri. The third phase of the business cycle was caused by the Israel-Lebanon war in the summer of 2006 which led to widespread civilian and infrastructure damage and ended a brief recovery in early 2006. Throughout the period 2002-2006, foreign aid was instrumental in the resilience of the ERBS program. Copyright © 2007 John Wiley & Sons, Ltd.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:20:y:2008:i:2:p:145-160

DOI: 10.1002/jid.1394

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