The double whammy of COVID-19 and oil price collapse: Spillover effects on inflation and exchange rates

Aissa Djedaiet () and Hicham Ayad
Additional contact information
Aissa Djedaiet: Assistant professor, Department of economics, Djilali Bounaama University, Khemis Miliana, Algeria

Review of Socio - Economic Perspectives, 2022, vol. 7, issue 2, 11-23

Abstract: The paper addresses two main issues. What is the response of the Algerian exchange rate (REER) to the double whammy of COVID-19 and oil price collapse? To what extent can the previous combination spill over into the inflation rate? For this purpose, we use monthly data covering the period January 2010 to June 2021, and we run both ARDL and NARDL models. The results show that the oil price and its shocks have a clear effect on inflation in both linear and non-linear modeling, especially in the short term. While there seems to be some inconsistencies concerning the influence of oil prices on REER and REER on inflation, owing mainly to the dinar devaluation policy, lower import bills, and the phase-out of basic commodities subsidies. The evidence also clearly reveals that the COVID-19 pandemic has a substantial negative effect on the REER and a positive effect on the inflation rate in the short term linear estimation.

Keywords: Algeria; COVID-19; Oil Price shocks; Exchange Rate; Inflation Rate; ARDL; NARDL (search for similar items in EconPapers)
JEL-codes: C32 E31 F31 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://reviewsep.com/wp-content/uploads/2022/05/2_AISSA.pdf (application/pdf)
https://reviewsep.com/?page_id=1776 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aly:journl:202206

DOI: 10.19275/RSEP126

Access Statistics for this article

Review of Socio - Economic Perspectives is currently edited by Veysel KAYA

More articles in Review of Socio - Economic Perspectives from Reviewsep
Bibliographic data for series maintained by Veysel KAYA ().