Measurement And Analysis The Impact Of Public Expenditure On Inflation In Algeria For The Period 1994-2017

Abstract

This study analyzes and measures the impact of Public Expenditure on Inflation in Algeria for the Period 1994-2017, using the error correction and Granger Causality Model. We conclude that there is a causal relationship between Public Expenditure and Inflation in Algeria, also we find there is a long run relationship that exists between the variables examined, the result indicated that increase of public expenditure led to increasing of inflation rates, so we recommend the need to adopt an effective fiscal policy to reduce the inflation rates in Algeria. Also rationalize public expenditure and allocate it to the productive sectors which participate in the economic development and import substitute industry to avoid the imported inflation.