مجلة الإقتصاد الجديد
Volume 16, Numéro 2, Pages 391-404
2025-07-21
Exchange Rate And Oil Price Volatility As Determinants Of Inflation In Algeria : New Evidence Using Structural Break Cointegration (1970–2023)
Authors : Yousfi Elhousseyn .
Abstract
This study represents an attempt to analyze the long run relationship between the exchange rate, oil prices, and domestic inflation in the Algerian economy over the period from 1970 to 2023.To achieve this, a range of econometric techniques were employed, notably stability tests and cointegration tests that account for the presence of structural breaks within the data. The findings indicate that the variables under consideration satisfy the conditions of stationarity, despite the presence of multiple structural breaks. Furthermore, the results of the cointegration test with structural breaks reveal the existence of a long run equilibrium relationship, with 1997 identified as a key structural break point. The estimation results of the long run relationship show a statistically significant relationship between inflation, the exchange rate, and oil prices in Algeria characterized by a positive effect. These findings offer new insights and highlight the importance of adopting effective exchange rate policies aimed at maintaining acceptable price levels, while taking into account the fluctuations in oil prices due to their crucial role in Algeria’s economic structure.
Keywords
Inflation, Exchange Rate, Oil Prices, Algerian Economy, Structural Breaks.
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