Analysis of the Twin Deficits in Light of the Monetary and Financial Variables in the Libyan Economy During the Period (1990-2022) " An Econometric study "
DOI:
https://doi.org/10.58916/jhas.v10i2.725Keywords:
current account deficit, budget deficit, Twin Deficit, ARDL, Libya.Abstract
This study discusses the relationship among current account deficit, budget deficit in light monetary and financial variables in the Libyan economy during the period (1990-2022) using the (Bounds test) and ARDL model to estimate the long-run and short-run relationship between study variables in long-run and short-run. The results showed that there is a co-integration relationship between the study variables in the long-run, and that the current account deficit is positively affected by budget deficit, and negatively by both the foreign exchange rate and government spending, while the effect of trade openness was not statistically significant. The results also showed that there was a unidirectional causal relationship between the current account deficit and the budget deficit, going from the budget deficit to the current account deficit in the short-run, and that the causal relationship between them in the long-run was bidirectional.
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