Abstract
In this paper, we examine the interaction between oil exports’ revenues and long-run economic growth in Algeria over the period 1979–2013. Advanced econometric procedures including the cointegration VARX (VAR with exogenous variables) model, over-identifying restrictions, bootstrapping, persistent profiles and Generalized Impulse Response Function are utilized in the empirical analysis. The results show a strong and positive association between oil revenue and long-run economic growth, but negative linkages between the volatility of oil revenues and growth in Algeria. Our impulse response analysis also provides evidence that a positive shock in oil revenues increases the level of real output, and appreciates the real exchange rate.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. For further information, see: http://www.eia.doe.gov.
2. Algeria’s major trading partner includes the 17 Euro area countries, United States, and China.