The Impact of Oil Price Volatility and General Price Level on Economic Growth in Libya (2025–1990)

Abstract

This study aims to measure and evaluate the impact of oil price fluctuations, the general price level (inflation), the degree of trade exposure, and oil revenues on economic growth in Libya during the period 1990–2025. The distributed lag autoregression (ARDL) methodology and the bounds cointegration test were employed. The results showed a long-term equilibrium relationship between the study variables, indicating that oil revenues have a significant long-term impact, while most of the dynamic effects of the independent variables were concentrated in the short term. Therefore, the study recommends the importance of reducing excessive dependence on oil revenues by supporting non-oil economic sectors (such as agriculture, industry, and services), managing oil shocks, activating sovereign wealth funds, and enhancing coordination between monetary and fiscal policies to control general price levels and protect citizens' purchasing power.