The impact of oil price shocks on economic growth in Algeria

Author/s Kamel Malik Bensafta
Publishing Year 2023 Issue 2022/2 Language English
Pages 20 P. 63-82 File size 335 KB
DOI 10.3280/EFE2022-002004
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In this study, we investigate the consequences of oil price shocks on Algerian economic growth, both on an aggregated and a disaggregated level. We adopt the method used in (Kilian, 2009) in which global oil supply shocks, global demand shocks, and anticipated demand shocks are defined. We use a two structural VAR models. The first model identifies shocks to oil prices using monthly data on oil production, oil real prices, and indicators of global eco- nomic activity. The second model describes the dynamics of a set of macroeconomic varia- bles: real overall GDP, hydrocarbon GDP, agricultural GDP, construction GDP, and interna- tional trade variables. To grasp the impact of oil shocks on sectoral growth, the model is aug- mented via three external shocks identified in the first stage. Our results are twofold. First, they show the significance of the oil price shocks’ impact on the Algerian economy. Second, they indicate an asymmetry in this impact. Negative shocks to oil prices have depressive ef- fects on economic activity as a whole, including the non-hydrocarbon sector. We detect a delay-effect; global demand shocks affect economic sectors after 5-7 quarters, whereas oil price shocks affect the hydrocarbon sector after 1-2 quarters only.

Keywords: oil price shocks, structural var, disaggregated growth, Algeria, oil exporting coun try.

Jel codes: C32, E32, Q43, F43, O55

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Kamel Malik Bensafta, The impact of oil price shocks on economic growth in Algeria in "ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT" 2/2022, pp 63-82, DOI: 10.3280/EFE2022-002004