The impact of the budget deficit on inflation in Algeria An application of the ARDL approach during the period (1980-2018)

Abstract

This study examines the deficit–inflation relationship in Algeria, using an annual dataset that covers the period of 1980 to 2018. Autoregressive Distributed Lag (ARDL) approach has been applied to try to discover the long-run and short-run relationships between the inflation rate and the budget deficits. Different methods of financing fiscal imbalances have been followed, including borrowings and printing of money. The empirical results show that the fiscal deficit has a weak impact on inflation