Monetary policy response to oil price shocks in ِAlgeria : by using an bound testing approach (ARDL)‎

الملخص EN

This paper aims to study the dynamics and impact of oil price changes on indicators of monetary stability and the monetary policy mechanism in response to oil shocks.

First, a study of the historical development of oil prices from 1970 to 2018.

Second, monetary policy measures in Algeria.

Third, the use approach of AutoRegressive Distributed Lags (ARDL) in the study.

The study found that the main cause of the oil shocks is due to the geopolitical crises; the Bank of Algeria has taken three basic measures in response to the drop in oil prices, namely, Raise of the exchange rate, the purchase of sovereign debt, and unconventional financing.

As for the econometric study, we reached a cointegrating relationship between the variables of the study.

The analysis of the Impulse Function Response test also shows that inflation and the monetary supply are more affected by the oil price shocks.