التكامل الاقتصادي
Volume 13, Numéro 4, Pages 85-100
2025-12-31
Exploring The Short- And Long-run Effects Of Real Exchange Rate On Inflation In Algeria: Evidence From 1990–2024
Authors : Khelassi Abdelillah .
Abstract
This study analyzes the impact of real exchange rate fluctuations on inflation in Algeria over 1990–2024, focusing on short- and long-run dynamics. Using an ARDL framework with GDP, money supply, trade openness, and the real exchange rate, it captures the interplay of monetary, real, and external factors. Results show that exchange rate depreciation, monetary expansion, and trade openness significantly raise inflation in the short run, while GDP has no immediate effect. The significant negative error-correction term (–0.0458) confirms a stable long-run equilibrium but a slow adjustment process. In the long run, none of the variables significantly influence inflation. These findings highlight Algeria’s short-term vulnerability to external shocks and underscore the need for prudent monetary and exchange rate policies alongside structural reforms to reduce import dependence.
Keywords
Real Exchange Rate; Inflation; ARDL Model; Monetary Policy; Algeria.
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