Constructing a social accounting matrix for Libya

Abstract

The lack of coherent time series data for Libya is a serious obstacle for applied research on its economy. An alternative to econometric analysis is to use a social accounting matrix (SAM) in conjunction with an appropriately specified computable general equilibrium (CGE) model to address policy questions. We constructed a SAM for Libya for the year 2000, which integrates national income, input-output, flow-of-funds and foreign trade statistics into a comprehensive and consistent matrix. First, a macro-SAM was constructed to capture the macroeconomic framework of the economy. The macro-SAM was then disaggregated into a micro-SAM incorporating the accounts for activities, factors of production and main economic institutions (households, government and the rest of the world). Finally, the micro-SAM was balanced using a cross-entropy procedure in a general algebraic modelling system (GAMS). This matrix facilitates the numerical calibration of large analytical models to provide a suitable vehicle for policy experiments.