Coordination between fiscal and monetary policy in Algeria for the period of (1970-2019)

Abstract

This study aims to know the Relationship between fiscal policy and monetary policy in Algeria during the period (1970-2019) using the ARDL model, the results showed that the fiscal policy is affected in the long term by inflation, money supply and oil prices while in the short term of the interest rate and oil prices, as for monetary policy, they are affected in the long run by the interest rate and the budget balance, while in the short term to the budget balance only. These results confirm that the money supply in Algeria is largely affected by fluctuations in changes in the budget balance and this indicates that the monetary policy is not completely independent and that it responds to the requirements of fiscal policy and therefore the prevailing system in Algeria is a non-Ricardian system and it confirms the validity of the fiscal theory of prices level.