Hard currency inflows and sterilization policy in Algeria

Djedaiet Aissa and Hicham Ayad
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Djedaiet Aissa: Djilali Bounaama University

SN Business & Economics, 2022, vol. 2, issue 9, 1-16

Abstract: Abstract For exploring the ability of the Algerian bank to manage the sterilization policy to successfully neutralize the recurrent waves of hard currency inflows, and thus maintaining the monetary base stable, we run Markov switching auto-regressive model taking monthly data from January 2002 to December 2018. The findings indicate that both regimes of the sterilization policy have been carried out near to the desirable sterilization coefficient (− 1). Furthermore, according to the transition probabilities, the dominance has been for the second regime with a higher coefficient (equals to – 0.98). Hence, the Algerian bank has notably kept the monetary base in check.

Keywords: Monetary sterilization policy; Hard currency inflows; MSVAR model; Foreign and domestic assets; Monetary base (search for similar items in EconPapers)
JEL-codes: C22 E52 F32 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s43546-022-00309-z

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