Studying the relationship between some macroeconomic variables and economic growth in Algeria using the ARDL model

This study investigates the impact of exchange rate fluctuations, inflation, and oil prices on Algeria's economic growth from 1990 to 2022. Employing the Autoregressive Distributed Lag (ARDL) model and analyzed using EViews 12, the research evaluates both short- and long-term dynamics among these variables. The findings reveal a significant inverse relationship between exchange rate depreciation and economic growth, suggesting that currency instability adversely affects Algeria’s economic performance. Similarly, inflation exhibits a negative long-term association with growth, highlighting the detrimental effects of rising price levels on the economy. Conversely, oil prices demonstrate a positive long-term relationship with growth, underscoring Algeria’s reliance on hydrocarbon revenues as a key driver of economic expansion. The model’s estimation results indicate that these independent variables collectively explain 91% of the variations in economic growth, confirming their substantial influence. These insights underscore the need for policymakers to stabilize exchange rates, control inflation, and diversify the economy to mitigate overdependence on oil. The study contributes to the empirical literature on macroeconomic determinants of growth in resource-dependent economies.