Topics in Middle Eastern and North African Economies

Document Type

Article

Publication Date

5-1-2014

Abstract

The goal of this study is to investigate the relationship between oil price and the nominal US Dollar/Algerian Dinar exchange rate through an empirical analysis using a VAR Model (Vector Autoregressive Model) upon monthly data for the period 2003-2013. Results show that a cointegration relationship is not detected between the oil and exchange rate in Algeria. However, the estimation of a VAR model indicates that a 1% increase in oil price would tend to depreciate Algerian Dinar against US Dollar by nearly 0.35%. This negative impact emphasizes how the Algerian dinar is a non-oil currency and explains how the foreign exchange receipts from hydrocarbon exports help swell Algerian public spending that would cater for public budget deficit curtailment.

Identifier

2334-282X

Journal Title

Topics in Middle Eastern and North African Economies

ISSN

2334-282X

Publisher

Middle East Economic Association and Loyola University Chicago

Volume

16

Comments

Presentation of the articles in the Topics in Middle Eastern and North African Economies was made possible by a limited license granted to Loyola University Chicago and Middle East Economics Association from the authors who have retained all copyrights in the articles. http://www.luc.edu/orgs/meea/volume16/meea16.htm

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

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