The impact of exchange rate changes on the Libyan economy

Abstract

The paper aims to examine the effects of exchange rate changes of economic growth of Libya, using annual data onto the period 1990-2016, the paper employed the ordinary least squares (OLS); the Johansson Co-integration test and the error correction mechanism (ECM) to examine the relationship between exchange rate and economic growth in Libya. The result suggests that there is a weak relationship between exchange rate and economic growth in Libya, negative effect between of the money supplies and per capita gross domestic product and exchange rates In addition to the positive impact between trade openness and exchange rates. It therefore suggested that the Libyan government is to improve the competitiveness in the international market through export diversification.