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

Djamal Dekkiche (), Yassine Mimouni () and Soufyane Bouguetaia ()
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Djamal Dekkiche: Research laboratory in financial market management using automated media and Mathematics; Relizane University, Algeria
Yassine Mimouni: Research laboratory in Financial Market Management Using Mathematical Methods and Automated Media, Ahmed Zabana University-Relizane, Algeria
Soufyane Bouguetaia: Research Laboratory in Financial Market Management Using Mathematical Methods and Automated Media, Ahmed Zabana University-Relizane, Algeria

Economic Themes, 2022, vol. 60, issue 1, 95-117

Abstract: 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.

Keywords: Balance of payments; Exchange rate; Interest rate; Inflation rate; ECM Approach; ARDL Model (search for similar items in EconPapers)
JEL-codes: C32 F43 P24 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecothe:v:60:y:2022:i:1:p:95-117:n:1

DOI: 10.2478/ethemes-2022-0006

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