ORCID
Serhan Cevik 0000-0002-2373-2023
Abstract
Libya is highly dependent on exhaustible and volatile hydrocarbon resources, which constitute the bulk of government revenues. Although resource wealth provides the means to promote socio-economic development, procyclical fiscal policies threaten macroeconomic stability as well as fiscal sustainability and intergenerational equity. This paper provides an assessment of the cyclically adjusted fiscal stance, analyzes fiscal sustainability according the permanent income framework, and simulates various fiscal policy rules with the objective of developing a rulebased fiscal strategy that would delink the economy from oil price fluctuations, improve the management of resource wealth, and safeguard macroeconomic stability. The empirical results suggest that an “enhanced” structural fiscal balance rule would provide the strongest anchor for policymaking, accommodating for output and/or commodity price shocks, though at the cost of relative complexity.
Recommended Citation
Caceres, Carlos; Cevik, Serhan; Fenochietto, Ricardo; and Gracia, Borja
(2024)
"The Day After Tomorrow: Designing an Optimal Fiscal Strategy for Libya,"
Journal of Banking and Financial Economics: Vol. 2015:
No.
4, Article 3.
DOI: 10.7172/2353-6845.jbfe.2015.2.3
Available at:
https://press.wz.uw.edu.pl/jbfe/vol2015/iss4/3
First Page
32
Last Page
50
Page Count
19
Received Date
University of Warsaw
Revised Date
22 January 2015
Accept Date
18 May 2015
Online Available Date
16 July 2015
DOI
10.7172/2353-6845.jbfe.2015.2.3
JEL Code
E32; E62; H11; H62; O13
Publisher
16 July 2015