The relationship between public spending and inflation : an econometric study of Algerian economy over the period 2001- 2017

Abstract EN

This study aims to identify the relationship between public spending and inflation rates in Algeria from 2001 to 2017.

At that time, the country experienced a new economy by adopting a Keynesian vision model represented as a series of programs called Economic Recovery Programs, whose fundamental principle is to stimulate local demand and domestic production by increasing public spending.

We used the descriptive approach to identify this effect in addition to the quantitative statistical methods represented in an econometric study, using the Vector Error Correction Model (VECM).

The results show that there is a positive short and long-term relationship between public spending and inflation rate.

This indicates that these programs have not contributed to stimulating local production as much as they have helped to stimulate domestic demand, which in turn has contributed to increasing inflationary pressures.

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