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A Simulation Study of the Impact of World Oil Prices on the Development of the Libyan Economy
This study is concerned with examining the effects of recent developments in the world oil market on the development of Libya, which is heavily dependent on revenues from its oil exports. Our goal in this study is to determine quantitatively how sensitive and vulnerable the Libyan economy's aggregates are to fluctuations in world oil prices. In order to achieve our goal, a macroeconomic model of the Libyan economy was constructed using annual data from 1962-1978. The model contains 36 relations, of which 19 are behavioral equations and 17 are identities. The model was validated by both historical simulation and a one-period out-of-sample forecast. Having established the predictive ability of the model, alternative future scenarios of the Libyan economy were examined from 1980-1987 by performing an ex-ante simulation for this period. This simulation was divided into two sections. The first covers the period 1980-1983, for which actual data for Libyan oil prices and the volume of Libyan oil exports are available. The second section covers the period 1984-1987. In this section the future of the Libyan economy was simulated under a basic price scenario which reflects the most likely forecast regarding the world oil price level from 1984-1987. In addition, a sensitivity analysis was performed by establishing a new scenario for the world oil price level from 1984-1987. A comparison of the results of these simulations shows the effects resulting from changes in the world oil price level on the Libyan economy. A 10% increase in the world oil price level as compared to our basic scenario was found to stimulate the economy at a decreasing rate. It was also found that the expansion of the economy would have little side effects in terms of higher levels of the consumer price index. The wage rate in the non-oil sector showed more sensitivity with respect to changes in world oil price level than did the wage rate in the oil sector. In addition, government total expenditures and money supply were found to be relatively insensitive to changes in world oil price level
Determinants of FDI in France: Role of Transport Infrastructure, Education, Financial Development and Energy Consumption
This paper explores the effect of education and transportation infrastructure on foreign direct investment for the French economy over the period of 1965-2017. Economic growth, financial development and electricity consumption are also considered as additional determinants of foreign direct investment. In so doing, the SOR unit root test is applied in order to examine unit root properties of variables in the presence of sharp and smooth structural breaks in the series. To examine the presence of cointegration between the variables, the bootstrapping ARDL cointegration test is applied. The empirical results show the presence of cointegration between the variables. Education and transportation add to foreign direct investment. Financial development declines foreign direct investment. The relationship between electricity consumption (economic growth) and foreign direct investment is bidirectional. The nonlinear relationship between education (transportation infrastructure) and foreign direct investment is U-shaped
Determinants of FDI in France: Role of Transport Infrastructure, Education, Financial Development and Energy Consumption
This paper explores the effect of education and transportation infrastructure on foreign direct investment for the French economy over the period of 1965-2017. Economic growth, financial development and electricity consumption are also considered as additional determinants of foreign direct investment. In so doing, the SOR unit root test is applied in order to examine unit root properties of variables in the presence of sharp and smooth structural breaks in the series. To examine the presence of cointegration between the variables, the bootstrapping ARDL cointegration test is applied. The empirical results show the presence of cointegration between the variables. Education and transportation add to foreign direct investment. Financial development declines foreign direct investment. The relationship between electricity consumption (economic growth) and foreign direct investment is bidirectional. The nonlinear relationship between education (transportation infrastructure) and foreign direct investment is U-shaped