Macroeconomic Composite Index for Economic Stability: A Kaldorian ‎Analysis for the Algerian Economy  ‎

HAMDINI Abdallah; GAIDI Khemissi

doi:10.34118/djei.v12i1.1121

HAMDINI Abdallah University of Bordj Bou arreridj
GAIDI Khemissi University of Bordj Bou arreridj

DOI: https://doi.org/10.34118/djei.v12i1.1121

Keywords: Macroeconomic Stability, Composite index, Kaldor’s magic square, Foreign trade policy, ‎Economic reforms

Abstract

The Algerian economy has known many changes in foreign trade policy and adopted many economic reforms in order to achieve the main goal of the economic policy (Economic Stability). In the present paper, we propose a macroeconomic composite index for economic stability to analyze and evaluate the implications of these changes on the economic stability of the country or the performance of the adopted economic policies since the 1980s, by a single index number per year, which we call the Economic Stability Index (ESI), through Kaldor’s four macroeconomic variables (GDP, General level of prices, Employment ,and External balances) based on “The Magic Square” and the quantitative formulation of the “Normalized Magic Square” presented by Medrano-B & Teixeira (2013). As a result, the best period that the Algerian economy has known was the period reflected by the highest value of the ESI, through achieving favorable results for the four indicators simultaneously.

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