Economic growth and poverty reduction nexus : a co-integration analysis with regime shift

Abstract EN

This analytical review explores the relationship between poverty reduction as measured by the consumption per capita and economic growth in the case of Algeria for the period 1970-2015.we use in this paper the two types of unit root tests; without structural breaks (ADF, PP and Ng-perron) and with structural breaks (Zivot Andrews test (1992) and Clemente-Montanes-Reyes test (1998)), and to test to long run relationship among the variables, the paper apply the Gregory Hansen (1996) procedure to test the co-integration relationship with regime shift to avoid the spurious results from the traditional tests.

The results show that all the variables contains structural breaks in different dates, and the results obtained from the Gregory Hansen test indicate that there is a long run relationship among the variables with a regime shift in 2008.

This result reveals that the poor people in Algeria benefit from the economic growth which means that the Algerian economic growth is propoor.