The Impact of the Exchange Rate on Balance of Payments in Algeria: An ARDL Model Approach

This study aims at examining the extent to which the exchange rate impacts on balance of payments in Algeria (BoP) during the period 1980-2019, using the Auto-Regressive Distributed Lag (ARDL) model and the Error Correction Model (ECM). This approach tests the presence of a long-run relationship bet...

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Published inEconomic Themes Vol. 60; no. 1; pp. 95 - 117
Main Authors Djamal, Dekkiche, Yassine, Mimouni, Soufyane, Bouguetaia
Format Journal Article
LanguageEnglish
Published Nis Sciendo 01.03.2022
De Gruyter Poland
Subjects
ARDL Model
Balance of payments
C32
ECM Approach
Exchange rate
F43
Inflation rate
Interest rate
P24
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Summary:This study aims at examining the extent to which the exchange rate impacts on balance of payments in Algeria (BoP) during the period 1980-2019, using the Auto-Regressive Distributed Lag (ARDL) model and the Error Correction Model (ECM). This approach tests the presence of a long-run relationship between the variables.A set of relevant variables, in addition to exchange rate, were used to include real interest rate, oil price, GDP per capita, Government expenditure, and inflation rate, based on previous studies of the subject. The results indicate the existance of a long-run equilibrium relationship between the dependent and independent variables. The exchange rate has a negative impact on the balance of payments in the short-run.
Bibliography:ObjectType-Article-1
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ISSN:2217-3668
0353-8648
2217-3668
DOI:10.2478/ethemes-2022-0006