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The impact of real oil revenues fluctuations on economic growth in Algeria: evidence from 1960-2015 data

LAOURARI, Imène and GASMI, Farid (2016): The impact of real oil revenues fluctuations on economic growth in Algeria: evidence from 1960-2015 data.

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Abstract

This paper investigates the impact of real oil revenues fluctuations on economic growth in Algeria using data from 1960 to 2015. To shed some new light on this question, we use a measure of real oil revenues recently developed by Gasmi and Laourari (2015) that is endogenous to Algeria’s international trade structure. We apply the Johansen multivariate cointegration approach to analyze the short-run and the long-run dynamic relationship between real oil revenues and economic growth proxied by two variables, namely, real GDP and industrial sector growth. The cointegration analysis suggests that a long-run relationship exists between real oil revenues, real GDP, and industrial growth in Algeria. The impulse response function and the variance decomposition analysis suggest that the impact of unexpected shifts in real oil revenues on the country's economic and industrial growth is negative.

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