Money Supply and Its Impact on Inflation: An Empirical Study of the Libyan Economy During the Period (2010–2024)

Abstract

This study aims to measure and analyze the impact of money supply on inflation in the Libyan economy during the period (2010-2024). Inflation was used as the dependent variable, expressed by the Consumer Price Index (CPI), and money supply (M2) as the independent variable. The study relied on a descriptive approach and econometric analysis using the SPPS statistical program to analyze and interpret data, using reliable sources (the Central Bank of Libya). The econometric analysis revealed a strong positive correlation
 (R = 95.3%) between money supply and inflation. For every unit increase in money supply, inflation rates in the Libyan economy increased by a parameter of 0.2%. The analytical aspect also revealed that a rise in the Consumer Price Index (CPI) leads to a decline in the purchasing power of the Libyan dinar, with a negative growth rate of -57% during the study period. The study recommends the adoption of prudent monetary policies aimed at controlling the money supply and enhancing economic stability by diversifying income sources and improving the investment environment.