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Asymmetric Responses of Oil Price Shocks on Economic Growth in Algeria: An Empirical Analysis through NARDL Approach

Author

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  • Dahmani Mohamed Driouche
  • Attouchi Manel
  • Chenini Moussa
  • Benbouziane Mohamed

Abstract

This empirical study examines the asymmetric effects of oil price shocks on economic growth in Algeria. The dynamic models of Non-linear Autoregressive Distribution Lags (NARDL) are used to analyze this relationship throughout 1970-2018. The results of this study reveal that there is a non-linear connection among the variables in the long run. As the empirical results of the NARDL model estimation shows that the response of real GDP to positive oil shocks is greater than the negative shocks. It is also evident that positive shocks have a low effect on economic growth in Algeria. In the short term, the results show that the effect of oil shocks on economic growth is symmetric and very weak. While the results showed that government revenue has a greater impact on economic growth than capital expenditure. This reflects the urgent need to diversify sources of income to ensure its sustainability as a first stage before focusing on the government spending aspect.

Suggested Citation

  • Dahmani Mohamed Driouche & Attouchi Manel & Chenini Moussa & Benbouziane Mohamed, 2020. "Asymmetric Responses of Oil Price Shocks on Economic Growth in Algeria: An Empirical Analysis through NARDL Approach," Energy Economics Letters, Asian Economic and Social Society, vol. 7(2), pages 74-93.
    • Handle: RePEc:asi:eneclt:v:7:y:2020:i:2:p:74-93:id:178
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    Cited by:

    1. Mohamed Noureldin Sayed & Ghada H. Ashour & Nesrin A. Abbas, 2021. "The Impact of the Volatility in Oil Prices on Saudi Arabia s and Algeria s Military Expenditure: A Comparative Study," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 180-190.

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