STABILIZATION FUND AND FISCAL POLICY: EVIDENCE FROM ALGERIA

Chekouri, Sidi Mohammed; Chibi, Abderrahim; Benbouziane, Mohamed

Les cahiers du CREAD
Volume 34, Numéro 3, Pages 31-61
2019-06-14

Stabilization Fund And Fiscal Policy: Evidence From Algeria

Authors : Chekouri Sidi Mohammed . Chibi Abderrahim . Benbouziane Mohamed .

Abstract

The aim of this paper is to examine if the presence of stabilization funds helps Algeria –as an oil rich economy- to stabilize their expenditures and address the pro-cyclical behaviour of fiscal policy, using Autoregressive Distributed Lag (ARDL) model for the period 1984-2016. Like in other oil countries, government spending in Algeria is found to be strongly pro-cyclical .The results show that the establishment of stabilization fund in Algeria has not contributed to reduce the government spending pro-cyclicality. Part of the reason behind this is the absence of rule that limits the withdrawals from the fund to finance budget deficit.