Asymmetric Responses of Oil Price Shocks on Economic Growth in Algeria: An Empirical Analysis through NARDL Approach

This empirical study examines the asymmetric effects of oil price shocks on economic growth in Algeria. The dynamic models of Non-linear Autoregressive Distribution Lags (NARDL) are used to analyze this relationship throughout 1970-2018. The results of this study reveal that there is a non-linear connection among the variables in the long run. As the empirical results of the NARDL model estimation shows that the response of real GDP to positive oil shocks is greater than the negative shocks. It is also evident that positive shocks have a low effect on economic growth in Algeria. In the short term, the results show that the effect of oil shocks on economic growth is symmetric and very weak. While the results showed that government revenue has a greater impact on economic growth than capital expenditure. This reflects the urgent need to diversify sources of income to ensure its sustainability as a first stage before focusing on the government spending aspect.