Real Exchange Rate Misalignments of Libyan Dinar: Fundamentals and Markov Switching Regimes

Bhattarai, Keshab; Ben-Naser, Abdulhamid

Abstract

This study found evidence for a time-varying misalignments of equilibrium RER of the Libyan dinar. Markov switching model explains the overvaluation episodes during. Policy makers should urgently align the actual exchange rate very close to the movements in fundamentals such as real oil price, real relative productivity and degree of openness in order to avoid the inverse impacts of real exchange rate misalignments, up to by a factor of six now, on the Libyan economy.

Citation

Bhattarai, K., & Ben-Naser, A. (2020). Real Exchange Rate Misalignments of Libyan Dinar: Fundamentals and Markov Switching Regimes. Journal of Development Economics and Finance, 1(1), 151-162

• Journal Article Type: Article
• Acceptance Date: Aug 19, 2020
• Online Publication Date: Sep 14, 2020
• Publication Date: Sep 14, 2020
• Deposit Date: Sep 21, 2020
• Publicly Available Date: Sep 24, 2020
• Electronic ISSN: 2582-5194
• Publisher: ARF India
• Peer Reviewed: Peer Reviewed
• Volume: 1
• Issue: 1
• Pages: 151-162
• Keywords: F31; F13; F14; Real exchange rate misalignment; Libya; Markov switching regime
• Public URL: https://hull-repository.worktribe.com/output/3617082
• Publisher URL: http://arfjournals.com/economics-finance-accounting/jdef