THE NATURE OF THE NEXUS BETWEEN CENTRAL BANK INDEPENDENCE AND MACROECONOMIC INDICES: EMPIRICAL EVIDENCE FROM ALGERIA

Our study's primary goal is to ascertain how Algeria's economic reforms from 1990 to 2024 affected the Central Bank of Algeria's (Bank of Algeria) independence, given that the Bank of Algeria's independence was given birth by amendments to the law on cash and loans (No. 90-10). As a result, understanding the relationships between the key variables that represent the economic reforms and the elements of Algeria's macroeconomic policy with the expansion of the Bank of Algeria's independence is crucial because it shows how closely the country's monetary and fiscal authorities collaborated when developing its macroeconomic policy. The main finding is that the Bank of Algeria still lacks the autonomy to establish its own monetary policy objectives, even after a number of legislative changes to the country's credit and monetary legislation. Although the goal of the changes has been to modernize the banking industry, the central bank has not been given complete autonomy. Consequently, the Bank's capacity to execute policies that are crucial for sustained economic stability is restricted since it is still subject to the decisions made by the government. Furthermore, the government leads macroeconomic policy with renewed support from the Monetary Authority, indicating the nature of the coordinated relationship between the government and the Central Bank of Algeria. This is noteworthy because standard results indicated a very weak relationship between various macroeconomic variables and the Central Bank of Algeria's independence.