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The Central Bank of Algeria has announced a managed float of the Algerian dinar since 1994. Yet, there are some substantial differences between various de facto classifications of Algeria’s exchange rate regime. This study looks into the exchange rate regime of Algeria, aiming to identify de facto regime. To identify the implicit basket weights for the Algerian dinar, first the OLS rolling window methodology is used to estimate the celebrated Frankel-Wei regression. Then, the wavelet-based methods are applied to study the co-movement patterns of the exchange rates of the Algerian dinar, US dollar, and Euro. In the main, the OLS rolling window results show that the US dollar and the Euro are the currencies with the most influence over the Algerian dinar. Further, from the Wavelet Multiple Correlation (WMC) results, the US dollar is identified as the potential leader in the implicit basket for the Algerian dinar. Additionally, from the Wavelet Local Multiple Correlation (WLMC) results, it is found that the Algerian DZD, US dollar, and Euro are highly correlated, with a correlation value around 0.90 for most of the time scales. Based on the results obtained, we suggest that Algeria’s exchange rate regime could be a crawling peg and band around the US dollar and Euro.

This study focuses on the empirical tests for the sustainability and solvency of fiscal policies in Algeria using a nonlinear model approach, based on quarterly data from 1963Q1 to 2017Q1 on the Algerian budget balance-GDP. Empirical evidence indicates that the adjustment behavior of the budget balance has nonlinear characteristics in the form of a Logistic model depending on the oil price. On the other hand, unit-root tests (linear, nonlinear, and with structural break) accept the null hypothesis of the unit roots. This means that the time series of budget balance is not stationary (not mean reverting characteristic), and therefore cannot sustain the budget deficit in Algeria over the long term. This suggests that Algerian government needs to pay more attention to the fiscal policy and efficiently control the budget deficit to avoid the debt crisis.

The relationship between natural resources and the ecological footprint is a debate issue and shows inconclusive results. Therefore, the present study attempts to examine the role of natural resource abundance in shaping Algeria’s ecological footprint over the period 1970–2018 using autoregressive distributed lags (ARDL) and quantile-on-quantile regression (QQR). Empirical findings from the ARDL technique suggest that natural resource rents, GDP per capita, gross fixed capital formation, and urbanization increase ecological footprint. The QQR methodology, however, provided more insightful and in-depth findings compared to those of the ARDL. Interestingly, the findings of the QQR uncovered that while the impact of natural resources on ecological footprint is positive and substantial at the middle and upper quantiles, it gets weaker at the lower quantiles. This further implies that the over-extraction of natural resources would generate impacts on environmental degradation, while lesser natural resource extraction appears to be less detrimental to the environment. The QQR also reveals that economic growth, gross fixed capital formation, and urbanization have a positive effect on the ecological footprint in the majority of quantiles, with the exception of the lower quantiles of urbanization, where the effect is negative, indicating that the lowest degree of urbanization improved environmental quality in Algeria. Policymakers in Algeria are urged to pay critical attention to the management of the country’s natural resources, promote renewable energy sources, and develop public awareness to secure environmental sustainability.

This study estimated the fiscal reaction function to evaluate the sustainability of fiscal policy in Algeria from 1990 Q1 to 2022 using a nonlinear ARDL model. The results indicate that high debt levels adversely affect the budget balance during positive shocks, highlighting the need for effective debt management. The negative impact of the spending gap during downturns reflects Algeria’s reliance on government spending and the drawbacks of pro-cyclical fiscal policies. The output gap’s consistent positive effect on the budget balance suggests effective fiscal management. Additionally, oil price shocks, trade openness, and demographic changes all play significant roles in influencing the budget balance. Overall, the study reveals that insufficient responses to primary budget balance shocks weaken fiscal sustainability, emphasizing the need for improved debt management, counter-cyclical policies, economic diversification, and strategic fiscal adjustments to enhance financial stability in Algeria.

In the aftermath of the COVID-19 pandemic crisis, government debt has surged to unprecedented levels in most countries, including those of North Africa. In this study, we investigate the issue of public debt sustainability in four North African countries (Algeria, Libya, Morocco, and Tunisia). The Generalized Supremum Augmented Dickey–Fuller (GSADF) results show that Algeria, Libya, Morocco, and Tunisia have experienced periods of explosive public debt during the studied period. The identified episodes of explosive debt behavior can be seen as periods of unsustainable fiscal policy. Moreover, the Quantile Auto-Regressive (QAR) unit root results point to strong debt sustainability at the lower quantiles for the selected countries, while at the middle and upper quantiles, public debt exhibits an unsustainable dynamic. This finding, therefore, points to weak sustainability of debt and fiscal policies in Algeria, Morocco, Libya, and Tunisia. This paper provides further evidence that fiscal policies have become more unsustainable than sustainable in recent years in these countries. Consequently, fiscal policymakers in MENA countries should not overlook the unsustainability of public debt and its various effects when developing any strategy aimed at stimulating the economy through ever larger debt levels.

The present research aims to investigate the relationship between public and private investment in Algeria during the period (1984-2017), using Autoregressive Distributed Lag (ARDL) modelling. The results clearly represented that private investment is considerbly correlated to : real exchange rate, economic growth, real interest rate, country risk and trade openness, and it's also showed that the coefficient of public investment is negative and statistically significant with a value of -0.39. This is a clear evidence of the crowding-out effect in the Algerian economy.

PurposeThe world is nowadays facing major environmental damage and climate change everywhere. Carbon dioxide emissions are major causes of such change. It is in this respect that the current study provides a fresh insight into the dynamic nexus between energy consumption (EC), economic growth (EG) and CO2 emissions in Algeria, as it is considered as one of the top CO2 emitters in Africa.Design/methodology/approachThe authors use the wavelet approaches and Breitung and Candelon (2006) causality test to gauge the association between EC, EG and CO2 emissions over the period 1971–2018. Specifically, this study implements the wavelet power spectrum (WPS) to identify the power and variability of each variable at different time scales. The wavelet coherence, phase differences and partial wavelet coherence are also used to assess the co-movement and lead lag relationship between economic growth, energy consumption and CO2 emissions over different time scale. Finally, Breitung and Candelon (2006) causality test is used to find the causality among variables.FindingsThe wavelet power spectrum results indicate that economic growth, energy consumption and CO2 emissions share common strong variance in the medium and long run. Furthermore, the wavelet coherence results suggest that there is a significant co-movement between EG and CO2 emissions, and EG is the leading variable for CO2 emissions and EC. The results also unveil that both EG and EC cause CO2 emissions both in short and long run. The results suggest that Algeria should take suitable measures towards the promotion of renewable energy sources.Originality/valueThe present empirical study filled the literature gap of applying the wavelet approach and frequency domain spectral causality test to examine this relevant issue for Algeria.

Purpose This paper aims to examine the relationship between exchange rate and oil prices in Algeria over the period 2004Q1–2019Q4. Design/methodology/approach The nonlinear autoregressive distributed lag method is used to capture the potential asymmetric relationship among oil prices and the exchange rate. Frequency domain spectral Granger causality test is also applied to investigate the causal linkage between the two variables. The wavelet coherence is applied to analyze the evolution of this relationship both in time and frequency domains. Findings The empirical results reveal evidence of long-run asymmetric effects of oil price on Algeria’s real effective exchange rate (REER), implying that an increase in oil price causes a real exchange rate to appreciate, while a decrease in oil price leads to a real exchange rate to depreciate. More specifically, it is found that the impact of negative oil price shocks is higher than the one associated with positive shocks. The spectral Granger causality results further indicate that there is unidirectional causality running from oil price to REER in both medium and long run. The wavelet coherence findings provide evidence of some co-movement between the REER and oil price and point out that the oil price is leading real exchange rate in the medium and long terms. Originality/value This study contributes to the literature by investigating the asymmetric impact and the time domain causal linkage between oil price fluctuations and real exchange rate in Algeria.

Our study highlights the importance of the fiscal theory of price level, showing the role of FTPL in the interaction and coordination between monetary-fiscal policies under different economic regimes (ricardian and non ricardian). Depending on analytic methodology, the main results show that the economics regime is an important determinant of the theory of price level and the coordination way between policies. Besides, in Algeria, it is inevitable to choose FTPL according to its economic capabilities.

This study assesses the fiscal space available in Algeria from 1990 to 2022, with a focus on understanding the government's ability to implement fiscal policy without compromising financial sustainability. Given Algeria's heavy dependence on oil revenues, the analysis explores the country's vulnerability to external shocks and its capacity for fiscal maneuvering. The research employs the ARDL approach using quarterly interpolated data and applies three models: Bohn's fiscal reaction function and two specifications based on Ostry et al.'s fiscal fatigue framework. The empirical findings confirm the existence of a long-term relationship between the primary budget balance and public debt, with evidence of fiscal fatigue indicated by the negative cubic debt coefficient. The estimated fiscal space is limited, at only 0.10% of GDP, with the debt threshold reaching 62.9%. These results suggest Algeria lacks sufficient space for expansionary fiscal policies. The study's novelty lies in being the first to apply this modeling framework to Algeria, offering a robust and context-specific measurement of fiscal space. Practically, it provides essential insights for policymakers on the risks of excessive debt and highlights the need for structural reforms, revenue diversification, and prudent fiscal management to ensure long-term economic stability and resilience.