A standard study of the effect of monetary policy on the balance ‎of payments in Algeria for the period (1990-2014)‎

Abstract

The study aims to measure the impact of monetarypolicy on the economic balance through the study of (Magee, Oladipupo & Onotaniyohuwo) model. In which it has used Common integration test, and correcting error’s model of Engle & Granger in the short and the long term. The study has shown a long and an integrated relationship between monetary policy variables and payments’ balance; in addition, the most affecting variable on payment’s balance was exchange rate. For the variable of interest rate, it was found that its impact was not significant in the short term, but its impact on the long term was very weak, and it’s due to the weak Algerian banking system.