Analysis of the determinants of inflation in Algeria: ARDL cointegration approach

Benabdallah, Soumeya; Oulddali, Oussama

Revue d'économie et de statistique appliquée
Volume 21, Numéro 2, Pages 71-95
2024-12-05

Analysis Of The Determinants Of Inflation In Algeria: Ardl Cointegration Approach

Authors : Benabdallah Soumeya . Oulddali Oussama .

Abstract

This paper is one of several studies that have attempted to address the inflation phenomenon, with a focused investigation on ‎Algeria's economic landscape spanning from 1970 to 2022. In order to make this study, an Autoregressive Distributed Lag ‎‎(ARDL) cointegration model is used. Rise prices measured by the Consumer Price Index (CPI) is approached by main of ‎macroeconomic variables such as Gross Domestic Product (GDP) ; Money supply (M3); Price of oil (PO); Official Exchange ‎Rate (EXR) and Unemployment rate ‎(ENR). The result given is that money supply and oil prices exerted an impact on ‎inflation in Algeria. A significant short-run relationship has been finding between consumer price index and money supply, ‎official exchange rate, oil price, and unemployment rate. Also, for the long term, inflation in Algeria can be approached by ‎money supply, official exchange rate, and oil prices. Indeed, an increase in these variables relative to real output could lead to ‎an inflationary situation. However, the Algerian economic growth had an inverse effect on inflation. These results align with ‎the most of results found.‎