The Dynamics of Inflation in Algeria: Autoregressive Distributed Lag Approach(ARDL)

Abstract

This study aimed to investigate the Inflation Dynamics in Algeria, and estimate the equilibrium long-run relationship between the Inflation, exchange Rate, Money supply, and oil price. The present Study relies on The Bounds testing Methodology.Using the Autoregressive Distributed Lag (ARDL) co-integration framework.Using quarterly data from 2006Q2 to 2017Q2. The results confirm that a stable long-run relationship exists between the inflation and exchange Rate, and oil prices, which indicate that the exchange rate and oil prices are the most important determinants of inflation in Algeria during the study period.