The Main Determinants Of Inflation In Algeria: An Ardl Model

Inflation appears as a first challenge for recent economic performance in Algeria. This study examines the main determinants of inflation in Algeria using the ARDL model during the period 1980-2012. In this context, this paper focuses on the major sources to explain inflation trend in Algeria (imports price, oil price and money stock, government expenditure and effective nominal exchange rates of the Algerian Dinar). Our results based on ARDL model establish that a stable long-run relationship exists between inflation and its determinants. However, In the short run, only external factors (imports price, oil price and effective and nominal exchange rates) impact inflation in Algeria. Consequently, we may infer, as far as the impact on inflation is concerned, that fiscal and monetary policies cannot on their own be statistically significant