This study aimed to identify the impact of domestic investment as a determinant of growth in the Libyan economy during the period (1962-2008). Cobb-Douglas Function was used to analyze the relationship between real per-capita GDP and its most important determinants as described in Cobb-Douglas function. Properties of time series of the model variables have been analyzed by using several tests for determining the integration level of each time series separately. By using Johansen approach, the results showed the significance of the impact of investment on per-capita GDP, the results of tests revealed equilibrium relationship between per-capita GDP and its determinants in the

long and short-run. The study concluded that the elasticity of per-capita GDP to changes in domestic

investment is greater than the elasticity of labour force which appeared inelastic in the short and long-term.

This paper investigates the impact of the volatility of the underlying macroeconomic fundamentals on

exchange rate volatility utilizing the bounds testing approach to cointegration. The results show that, in the

long run the volatility of the money supply is the sole determinant, whereas in the short run overshooting

is found.