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Hard currency inflows and sterilization policy in Algeria

Author

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  • Djedaiet Aissa

    (Djilali Bounaama University)

  • Ayad Hicham

    (University Center of Maghnia)

Abstract

For exploring the ability of the Algerian bank to manage the sterilization policy to successfully neutralize the recurrent waves of hard currency inflows, and thus maintaining the monetary base stable, we run Markov switching auto-regressive model taking monthly data from January 2002 to December 2018. The findings indicate that both regimes of the sterilization policy have been carried out near to the desirable sterilization coefficient (− 1). Furthermore, according to the transition probabilities, the dominance has been for the second regime with a higher coefficient (equals to – 0.98). Hence, the Algerian bank has notably kept the monetary base in check.

Suggested Citation

  • Djedaiet Aissa & Ayad Hicham, 2022. "Hard currency inflows and sterilization policy in Algeria," SN Business & Economics, Springer, vol. 2(9), pages 1-16, September.
    • Handle: RePEc:spr:snbeco:v:2:y:2022:i:9:d:10.1007_s43546-022-00309-z
    DOI: 10.1007/s43546-022-00309-z
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    Cited by:

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    More about this item

    Keywords

    Monetary sterilization policy; Hard currency inflows; MSVAR model; Foreign and domestic assets; Monetary base;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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