This paper investigates the causal relationship between financial development and economic growth in Libya during the period 1970a2010. The empirical results vary with estimation methodology and model specification, but indicate the lack of 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, the VAR-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 countryas hydrocarbon earnings.We test the unit root or stationarity properties of our dataset and find no evidence of nonstationarity. Standard correlation ... Since both series are I(1), we can also use cointegration tests in our empirical assessment of the finance-growth nexus. VI. EMPIRICAL ... 7 It is important to stress that the decline in. AcInternationalanbsp;...
|Title||:||Searching for the Finance-Growth Nexus in Libya|
|Author||:||Mr. Serhan Cevik, Mr. Mohammad Rahmati|
|Publisher||:||International Monetary Fund - 2013-05-01|