Measuring the relative effectiveness of fiscal and monetary policy on economic growth in Algeria from 1990-2019

Abstract

The Algerian economy suffers from several problems, the most important of which is the low growth rates outside the hydrocarbon field, as economic policy makers and decision makers seek solutions to pursue macroeconomic policies, including fiscal and monetary policy, The aim of this study is to examine the relative importance of monetary and fiscal policy in Algeria using the method of joint integration and the error correction model.

Long-term analysis of financial and monetary indicators has shown that government spending affects economic growth very weakly, while the money supply negatively affects Algeria's economic growth, mainly due to a combination of negative factors in the Algerian economy that led to imbalances and distortions in financial and monetary performance, which contributed to the weak effectiveness of fiscal and monetary policy in achieving economic stability and stimulating economic growth.