IDEAS home Printed from https://ideas.repec.org/a/vrs/hjobpa/v15y2024i2p81-106n1007.html
   My bibliography  Save this article

Fiscal Reaction Function in Algeria: Nonlinear ARDL Approach

Author

Listed:
  • Said Imane

    (Department of Economics, LEPPESE laboratory, University Centre of Maghnia, Algeria)

  • Chibi Abderrahim

    (Department of Economics, LEPPESE laboratory, University Centre of Maghnia, Algeria)

Abstract

This study estimated the fiscal reaction function to evaluate the sustainability of fiscal policy in Algeria from 1990 Q1 to 2022 using a nonlinear ARDL model. The results indicate that high debt levels adversely affect the budget balance during positive shocks, highlighting the need for effective debt management. The negative impact of the spending gap during downturns reflects Algeria’s reliance on government spending and the drawbacks of pro-cyclical fiscal policies. The output gap’s consistent positive effect on the budget balance suggests effective fiscal management. Additionally, oil price shocks, trade openness, and demographic changes all play significant roles in influencing the budget balance. Overall, the study reveals that insufficient responses to primary budget balance shocks weaken fiscal sustainability, emphasizing the need for improved debt management, counter-cyclical policies, economic diversification, and strategic fiscal adjustments to enhance financial stability in Algeria.

Suggested Citation

  • Said Imane & Chibi Abderrahim, 2024. "Fiscal Reaction Function in Algeria: Nonlinear ARDL Approach," HOLISTICA – Journal of Business and Public Administration, Sciendo, vol. 15(2), pages 81-106.
    • Handle: RePEc:vrs:hjobpa:v:15:y:2024:i:2:p:81-106:n:1007
    DOI: 10.2478/hjbpa-2024-0016
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/hjbpa-2024-0016
    Download Restriction: no
    File URL: https://libkey.io/10.2478/hjbpa-2024-0016?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:hjobpa:v:15:y:2024:i:2:p:81-106:n:1007. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.