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Does fiscal policy spur economic growth? Empirical evidence from Algeria

Amal Matallah and Amal Matallah
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Amal Matallah: University of Abou Bekr Belkaid, Tlemcen, Algeria
Amal Matallah: University of Abou Bekr Belkaid, Tlemcen, Algeria

Theoretical and Applied Economics, 2017, vol. XXIV, issue 3(612), Autumn, 125-146

Abstract: The present paper aims to investigate the impact of fiscal policy on economic growth in Algeria over the period 1970-2015, by using Johansen cointegration test and vector error correction model (VECM). The main results reveal that both indirect taxes and productive current expenditures have a significant long-term positive impact on real GDP, while direct taxes, capital and unproductive recurrent expenditures negatively and significantly affect economic growth in the long run. Based on these findings, it could be concluded that sustainable economic growth requires serious policy measures aimed at diversifying the Algerian economy.

Keywords: fiscal policy; economic growth; Algeria; Johansen cointegration test; vector error correction model (VECM). (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:agr:journl:v:3(612):y:2017:i:3(612):p:125-146