The determinants of economic growth in Algeria, Empirical evidence through the ARDL approach
Keywords:
Autoregressive distributed lag model, Economic Growth, Macroeconomic analyzes of economic development, Algeria
Abstract
The purpose of this empirical study is to investigate the factors that determine economic growth in Algeria, specifically by incorporating financial variables from endogenous growth models. The Autoregressive Distributed Lag model was utilized to analyze three types of variables - financial, financial instabilities, and control - from 1965 to 2019. The results indicate that inflation has a positive correlation with growth in Algeria in both the short and long term, while an improvement in the M2/GDP ratio promotes growth in the short term. However, this effect diminishes in the long term, possibly due to the consumption structure of the Algerian economy. Additionally, the study confirms the existence of an error correction mechanism in the long term, with economic growth correcting to 91.1%.
References
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Ross, Levine, Norman Loayza, Thorsten Beck, et others. (2002) Financial intermediation and growth: causality and causes. Central Banking, Analysis, and Economic Policies Book Series 3: 031–084.
Ross Levine (2005). Finance And Growth: Theory And Evidence Ross Levine, Department of Economics, Brown University and the NBER, 64 Waterman Street, Providence, RI 02912, USA.
Ross Levine, R. (2005). Finance and Growth: Theory and Evidence. Handbook of Economic Growth, 1, 865-934.
Villieu, P. (2007). Macroéconomie : L’investissement, Paris, La Découverte (2ème éd).
Zivot, E., and D.W.K. Andrews, (1992). Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis. Journal of Business and Economic Statistics, vol. 10, no. 3, pp. 251-270.
Abu-Bader, Suleiman, et Aamer S. Abu-Qarn(2008). Financial development and economic growth: The Egyptian experience. Journal of Policy Modeling 30 (5): 887 98.
Ahmed Bouyacoub (2012). Quel développement économique depuis 50 ans ? L’harmattan confluences méditerranée, 2012/2 n°81, pp 83-102.
Barro, R. J., (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy, Vol. 98(S5), pp103-125.
Bencivenga, Valerie R., et Bruce D. Smith. (1991).Financial intermediation and endogenous growth ». The Review of Economic Studies 58 (2): 195–209.
Benhabib, Jess & Spiegel, Mark M., (1991). Growth Accounting with Physical and Human Capital Accumulation. Working Papers 91-66, C.V. Starr Center for Applied Economics, New York University.
Ben Jedidia Khoutem, Thouraya Dammak Boujelbene, Helali Kamel, (2014). Financial Development and Economic Growth: New Evidence from Tunisia, Journal of Policy Modeling.
Berthélemy, j.-c., et a. Varoudakis (1996). Economic Growth, Convergence Clubs, and the Role of Financial Development, Oxford Economic Papers, 48(2), pp 300–28.
Boyd, J., Levine, R. & Smith, B. (2001). The Impact of Inflation on Financial Market Performance. Journal of Monetary Economics.
Gali, J., (1992). How well does the IS-LM model fit the postwer U.S data ?, Quartely Journal of Economics, vol. 107, pp. 709-738.
George T. McCandless, Warren Weber (2005). Some monetary facts Quarterly Review, 1995, vol. 19, issue Sum, 2-11
Gertler, M. et A. Rose (1994).Finance, Public Policy and Growth, in G. Caprio, I. Atiyas et J. Hanson (éds), Financial Reform: Theory and Experience, New-York, Cambridge University Press.
Greenwood, Jeremy, et Boyan Jovanovic. (1990). Financial development, growth, and the distribution of income. Journal of political Economy 98 (5, Part 1): 1076– 1107.
Guillaumont p. Et m. Demeocq (1989). Risk and Ratchet Effects of Export Earnings Instability: a Cross Sectional Analysis, Mimeo, CERDI, University of Clermont I.
Guillaumont Jeanneney S. et J-L Paraire (1991). La variabilité des taux de change et le rattachement optimal des monnaies des pays en développement, Revue d’économie politique, vol. 101, n° 3, mai-juin.
Guillaumont, P. (1994). Politique d’ouverture, exportation et croissance économique: les effets de la croissance et de l’instabilité des exportations, Revue d’Économie du Développement.
Jung W.S (1986). Financial Development and Economic Growth: International Evidence, Economic Development and Cultural Change, vol. 34, n° 2.
Korinek, A. and Serven, L. (2010). Undervaluation through foreign reserve accumulation : Static losses, dynamic gains. World Bank Policy Research Working Paper Series, Vol.
King, R.G. and Levine, R. (1993). Finance and Growth: Schumpeter Might Be Right. The Quarterly Journal of Economics.
King, Robert G., et Ross Levine, (1993a). Finance and growth: Schumpeter might be right. The quarterly journal of economics 108 (3): 717–737.
King, Robert G., et Ross Levine (1993b). Finance and Growth: Schumpeter Might Be Right. The Quarterly Journal of Economics 108 (3): 717 37.
Lopez-Bazo E. and Moreno R., (2008). Does human capital stimulate investment in physical capital? Evidence from a cost system Framework. Economic Modelling.
Lucas R. E., (1988). On the mechanics of economic development. Journal of Monetary Economics, Vol. 22.
Lucas R. E., (1990). Why doesn’t capital flow from rich to poor countries? The American Economic Review, Vol.
Mankiew N. G., Romer D. and Weil D. N., (1992). A contribution to the empirics of economic growth. Querterly Journal of Economics.
Mankiw et al. (1992). A contribution to the empirics of economic growth Quarterly Journal of Economics.
Michel Aglietta (2011). Croissance durable : mesurons-nous bien le défi ? Université Paris Ouest (EconomiX), Cepii et Groupama-am.
Narayan, P.K. (2005). The Saving and Investment Nexus for China: Evidence from Cointegration Tests. Applied Economics.
Nouriel Roubini , Xavier Sala-i-Martin (1995). A growth model of inflation, tax evasion, and financial repression, 1995, vol. 35.
Pablo-Romero M. P. and Gómez-Calero M. (2008). Análisis por provincias de la contribución del capital humano a la producción en la década de los noventa. Investigaciones Económicas, Vol. 32.
Pablo-Romero M. P. and Gómez-Calero M., (2013). A Translog production function for the Spanish provinces: Impact of the human and physical capital in economic growth. Economic Modeling, Vol. 32.
Perron, P., (1997). Further Evidence on Breaking Trend Functions in Macroeconomic Variables. Journal of Econometrics, vol. 80.
Philp Arestis, et Panicos Dometrioles (1999). Finance and Growth: Institutional Considerations, Financial Policies and Causality. Zagreb International Review of Economics and Business.
Pierre-Richard Agénor, Joshua Aizenman (1994). Macroeconomic Adjustment with Segmented Labor Markets, IMF Working Papers from International Monetary Fund, No 1994/056.
Romer P. M., (1986). Increasing returns and long-run growth. Journal of Political Economy, Vol. 94, No. 5, 1002-1037.
Romer P. M., (1990). Endogenous technological change. The Journal of Political Economy, Vol. 98, No. 5, S71-S102.
Robert Barro and Xavier Sala-i-Martin (2005).Technological Diffusion, Convergence, and Growth No 5151, NBER Working Papers from National Bureau of Economic Research, Inc.
Robinson, Joan (1952) . The Generalization of the General Theory, in The rate of interest, and other essays. London: Macmillan, , pp. 67- 142.
Ronald MacDonald, Flavio Vieira (2010).A panel data investigation of real exchange rate misalignment and growth, Working Papers from Business School - Economics, University of Glasgow.
Levine, Ross. (1991).Stock markets, growth, and tax policy ». The Journal of Finance 46 (4): 1445–1465.
Ross, Levine, et Sara Zervos. (1996). Stock markets, banks, and economic growth. World Bank, Policy Research Working Paper
Ross Levine (1997). Journal of Economic Literature, Financial Development and Economic Growth. pp. 688-: vi6ws and Agenda University of Virginia.
Ross Levine (1997). Financial Development and Economic Growth: Views and Agenda, Journal of Economic Literature, Vol. 35, No. 2 (Jun., 1997), pp. 688-726.
Ross, Levine, Norman Loayza, Thorsten Beck, et others. (2002) Financial intermediation and growth: causality and causes. Central Banking, Analysis, and Economic Policies Book Series 3: 031–084.
Ross Levine (2005). Finance And Growth: Theory And Evidence Ross Levine, Department of Economics, Brown University and the NBER, 64 Waterman Street, Providence, RI 02912, USA.
Ross Levine, R. (2005). Finance and Growth: Theory and Evidence. Handbook of Economic Growth, 1, 865-934.
Villieu, P. (2007). Macroéconomie : L’investissement, Paris, La Découverte (2ème éd).
Zivot, E., and D.W.K. Andrews, (1992). Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis. Journal of Business and Economic Statistics, vol. 10, no. 3, pp. 251-270.
Published
2023-06-12
How to Cite
BELHIMER , H., & HELALI , K. (2023). The determinants of economic growth in Algeria, Empirical evidence through the ARDL approach. Journal of Excellence for Economics and Management Research, 7(1), 261-280. https://doi.org/10.34118/jeemr.v7i1.3633
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Original Article
