No abstract

In this paper, we aim to analyze whether the effect of fiscal policy on economic growth in Algeria differs throughout the business cycle. To tackle this question, we use a Markov Switching Vector Autoregressive (MSVAR) framework. We find evidence of asymmetric effects of fiscal policy through regimes, defined by the state of the business cycle (recession and boom). The results show small positive government spending and revenue multipliers in the short term in both regimes. Most importantly, fiscal policy shocks have a stronger impact in times of economic recession than in times of expansion, which confirm the hypothesis of asymmetric effects. However, the impact of government spending is stronger than the impact of public revenue during recession periods. In addition, fiscal policy decision-makers interact with Anti-Keynesian view (pro-cyclical). Our results imply that there is something to gain by using the "right instrument" at the "right time".

PurposeThe world is nowadays facing major environmental damage and climate change everywhere. Carbon dioxide emissions are major causes of such change. It is in this respect that the current study provides a fresh insight into the dynamic nexus between energy consumption (EC), economic growth (EG) and CO2 emissions in Algeria, as it is considered as one of the top CO2 emitters in Africa.Design/methodology/approachThe authors use the wavelet approaches and Breitung and Candelon (2006) causality test to gauge the association between EC, EG and CO2 emissions over the period 1971–2018. Specifically, this study implements the wavelet power spectrum (WPS) to identify the power and variability of each variable at different time scales. The wavelet coherence, phase differences and partial wavelet coherence are also used to assess the co-movement and lead lag relationship between economic growth, energy consumption and CO2 emissions over different time scale. Finally, Breitung and Candelon (2006) causality test is used to find the causality among variables.FindingsThe wavelet power spectrum results indicate that economic growth, energy consumption and CO2 emissions share common strong variance in the medium and long run. Furthermore, the wavelet coherence results suggest that there is a significant co-movement between EG and CO2 emissions, and EG is the leading variable for CO2 emissions and EC. The results also unveil that both EG and EC cause CO2 emissions both in short and long run. The results suggest that Algeria should take suitable measures towards the promotion of renewable energy sources.Originality/valueThe present empirical study filled the literature gap of applying the wavelet approach and frequency domain spectral causality test to examine this relevant issue for Algeria.

for their guidance during that workshop. Furthermore, we are grateful to Dr. Chahir Zaki for his valuable reviews and encouragement.

The issue of fiscal deficits and their sustainability is of great analytical and empirical interests to both academicians and policy makers. From the theoretical perspective, a large and growing fiscal deficit would lead to a worsening of the current account and appreciation of the real exchange rate. From a policy standpoint, determining whether the fiscal balance is on a sustainable path over time is important because the reply to this inquiry may indicate the requirement for policy reform before the imbalances become insolvent and lead to a hard landing. On the other hand, measuring sustainability of the fiscal deficit has been a highly contentious issue. Recent advancements in time series techniques, notably nonlinear modeling, allow analysts to reexamine the fiscal process and determine whether the fiscal balance is on a sustainable path. After the financial crisis of 2008-2009, the public debt of many countries has been on a steep upward trajectory due to implementation of various stimulus and relief packages directed toward financial sector and the economy as a whole. In fact, some European countries like Greece, Ireland, Portugal, Spain, and Italy are actually in serious dilemma with their public finances, which is reflected in the high yield demanded from the government bonds of these countries.