The impact of oil swings on the Algerian economy and their transmission channels

Abstract EN

Oil prices continue to demonstrate unpredictable and volatile behaviors.

hence, authorities of oil exporting countries are still trying to figure out the oil-macroeconomic relationship and the channels by which oil prices may affect their economies.

studies on the subject matter devoted to Algerian specific economy remain highly insufficient.

this study intends to clarify the dynamics of the main macroeconomic variables to both oil shocks and fiscal policy changes, making use of a vector autoregressive (VAR) model of a three-variable (oil prices, fiscal stance, and output) and its associated responses functions analysis.

the findings of the empirical analyses suggest that oil shocks have a significant impact on macroeconomic variables in Algeria.

despite the fact that the granger test reveals no signs of a long-term relationship.

impulse response analysis indicates that the fiscal stance is the mechanism by which changes in the price of oil transmit to the Algerian economy.