Estimating the effects of Coronavirus (COVID-19) on the Algerian economy using a computable general equilibrium model

Abstract

Today, our world is testifying one of the largest and most sharp types of global crises, as the global economy step inside a period of severe recession due to worrying spread of Coronavirus (COVID-19) alongside the drop in oil price. Algeria, like other countries that have taken a number of precautionary measures to ampler prevalence of this pandemic, such as laying off 50% of employees, closure many shops and commercial centers, adjourning investments, rising government spending and curtailing imports, all of this procedure will undoubtedly be hit and reflected on the Algerian economy. This study seeks to assess these economic effects of coronavirus on the Algerian economy, using a computable general equilibrium model in parallel of applying simulation method for a number of economic scenarios for this epidemic and resolves its non-linear equations utilizing the “Mat lab” program after constructing a database for this model with the Social Accounting Matrix. Researchers were able to answer the fundamental question and validate the hypothesis that the Algerian economy will be influenced negatively at all levels by the collapse of oil price and the paralysis of people and goods besides other government measures, which puts Algeria in face of a real challenge to attenuate the great economic and social costs, concluding it with a set of conclusions. We recommend decision-makers to increase the size of measures, such as raising customs tax rates, increasing government spending, and do not apply direct of even indirect fiscal measures, especially during these circumstances, which may constitute a burden on families and institutions