Public Expenditure and Economic Growth in Algeria: Evidence from ARDL Bounds Testing over the Period 1990–2022

Authors

  • Bilal BOULTIF University of Bordj Bou Arreridj
  • Belkacem RAHALI University of Bordj Bou Arreridj

Keywords:

Public expenditure, Economic growth, Fiscal policy, ARDL model, Cointegration

Abstract

            This paper investigates the impact of public expenditure on economic growth in Algeria over the period 1990–2022 using the Autoregressive Distributed Lag (ARDL) model and the Bounds Testing approach. The results reveal that Algeria’s economic growth remains fragile, primarily driven by the hydrocarbon sector, with expansionary fiscal policy failing to ensure sustainable growth. The econometric analysis confirms a long-run cointegrating relationship between public expenditure and GDP. The estimated elasticities of GDP with respect to public expenditure are 0.7125 in the long run and 0.5670 in the short run, while the error correction coefficient (–0.4923) indicates that nearly half of short-term disequilibria are corrected annually. These findings emphasize the need for enhancing fiscal efficiency, improving public spending quality, and promoting economic diversification to achieve stable and sustainable growth in Algeria.

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Published

12/31/2025

Issue

Vol. 10 No. 02 (2025)

Section

Articles

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