The Impact Of Monetary Policy On Economic Growth In Algeria During The Period (1990-2018): An Ardl Bounds Test Approach

Abstract

The main aim of this study is to investigate the impact of monetary policy on the economic growth by using annual time series data from 1990-2018 in Algeria. The application of the ARDL model has shown that there is a long run relationship between the monetary policy instruments and the economic growth. In addition, the results show that the influence of re-discount rate on GDP per capita in Algeria is higher than the influence of the real interest rate and money supply. According to the result of this study suggests that, the Algeria central bank needs to reconsider to apply on monetary policy to boost economic development, by employ the most effective instrument, as interest rate and the exchange rate rather than purely increase of money supply. Due to avoid negative impact of hyperinflation in order to maintain the economic stability and economic growth in the long run.