<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>While the COVID-19 pandemic has triggered the likelihood and intensity of the increased budget deficit affecting the inflation rate, increasing concerns emerge regarding the ability of governments to stabilize the price under the fiscal dominance in oil-exporting countries. This paper examines the viability of a non-Ricardian regime in Algeria under COVID-19 and the consequences of fiscal dominance on monetary policy. The study demonstrated that budget deficit/GDP, official exchange rate, an interest rate of treasury bills, oil prices, and broad money/GDP are all significantly connected to the inflation rate using an ARDL model from 1998 to 2020. Long-term cointegration is present, supporting the legitimacy of the non-Ricardian regime and the importance of fiscal policy. Empirical findings show the substantial role of the budget deficit, particularly during the COVID-19 period, on Algerian inflation, which has implications for the central bank, government.</p>
</abstract>

While the COVID-19 pandemic has triggered the likelihood and intensity of the increased budget deficit affecting the inflation rate, increasing concerns emerge regarding the ability of governments to stabilize the price under the fiscal dominance in oil-exporting countries. This paper examines the viability of a non-Ricardian regime in Algeria under COVID-19 and the consequences of fiscal dominance on monetary policy. The study demonstrated that budget deficit/GDP, official exchange rate, an interest rate of treasury bills, oil prices, and broad money/GDP are all significantly connected to the inflation rate using an ARDL model from 1998 to 2020. Long-term cointegration is present, supporting the legitimacy of the non-Ricardian regime and the importance of fiscal policy. Empirical findings show the substantial role of the budget deficit, particularly during the COVID-19 period, on Algerian inflation, which has implications for the central bank, government.

The Effects of Fiscal Dominance on Monetary Policies in Algeria Amidst COVID-19

University of Aїntèmouchent Belhadj Bouchaib

Zagreb International Review of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

{"article-title":"The Effects of Fiscal Dominance on Monetary Policies in Algeria Amidst COVID-19"}

While the COVID-19 pandemic has triggered the likelihood and intensity of the increased budget deficit affecting the inflation rate, increasing concerns emerge...

The Effects of Fiscal Dominance on Monetary Policies in Algeria Amidst COVID-19

Publié en ligne: 06 déc. 2023

Pages: 77 - 96

DOI: https://doi.org/10.2478/zireb-2023-0015

Mots clés
Fiscal dominance, Monetary policy, COVID-19, ARDL, Algeria

© 2023 Benheddi Ikram et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The Effects of Fiscal Dominance on Monetary Policies in Algeria Amidst COVID-19

Publié en ligne: 06 déc. 2023

Pages: 77 - 96

DOI: https://doi.org/10.2478/zireb-2023-0015

Mots clésFiscal dominance, Monetary policy, COVID-19, ARDL, Algeria

© 2023 Benheddi Ikram et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Mots clés
Fiscal dominance, Monetary policy, COVID-19, ARDL, Algeria