The Phenomenon of Hyperinflation in Libya: An Econometric Study During the Period (1990-2023)

Abstract

The Libyan economy is confrontation hyperinflation, which is considered to be one of the most significant economic problems facing many developing economies. Therefore, this research aims to verify the impact of monetary factors on hyperinflation during the period (1990-2023). The Autoregressive Distributed Lag (ARDL) model, aiming to measure the impact of independent variables on inflation. The results of the F-bound test using the ARDL model methodology indicate no relationship between the independent variables (i.e., money supply, exchange rate, budget deficit) and inflation in the long term. The results of the ARDL model using first differences also indicate a positive relationship between the money supply, exchange rate, budget deficit, and inflation. This confirms that a steady increase in money issuance leads to an exacerbation of hyperinflation rates over a short period of time. The research recommends controlling the amount of money in circulation and rationalizing public spending to achieve economic stability.