A Multi-Criteria Decision-Making Model for Prioritizing the Causes of Inflation in Libya Using the Best-Worst Method and Analytic Hierarchy Process

Abstract

Inflation remains one of the most persistent and destabilizing economic
challenges facing Libya, affecting purchasing power, investment, and overall
economic stability. Understanding its root causes is essential for designing
effective and targeted policy interventions. This study investigates the main
drivers of inflation in Libya by applying a hybrid Multi-Criteria Decision-
Making (MCDM) approach that combines the Best-Worst Method (BWM) and
the Analytic Hierarchy Process (AHP). Eight critical inflation-related factors
were identified through expert consultations and economic literature,
including structural, monetary, and institutional elements. The BWM was first
used to determine initial weight coefficients by comparing the most and least
influential factors, followed by the AHP to conduct comprehensive pairwise
comparisons. The final weights were derived by aggregating the results from
both methods to ensure robustness and consistency. The findings indicate
that weak domestic production and political instability are the most
significant contributors to inflation in Libya, followed by currency
devaluation and monetary expansion. These results emphasize the need for
integrated policy responses that not only address monetary dynamics but also
confront deeper structural constraints. The study offers a transparent and
replicable framework for inflation analysis and contributes to more informed
and context-specific economic policymaking in fragile and transitional
economies.