The Asymmetric Impact of Oil Price Fluctuations on Public Expenditure Policy in Algeria during the Period 2000–2023: An Empirical Study Using the Nonlinear Autoregressive Distributed Lag (NARDL) Model

Abstract

This study aims to analyze and measure the asymmetric impact of crude oil price fluctuations on the responsiveness of fiscal policy, represented by public expenditure in Algeria, over the period 2000–2023. The nonlinear autoregressive distributed lag (NARDL) model is employed to examine the short- and long-run dynamics of this relationship, alongside tests for asymmetry and shock analysis. The empirical findings reveal the existence of a long-run equilibrium relationship between public expenditure and both positive and negative oil price shocks. Moreover, the results confirm the presence of an asymmetric effect of oil price fluctuations on public expenditure in both the short and long run. It is further observed that Algeria’s fiscal policy exhibits a stronger responsiveness to positive oil price shocks in the medium and long term compared to its response to negative shocks.