The role of the policy of expanding public spending in creating inflationary gaps in Algeria

Abstract

this research paper aimed to analyze the impact of the policy of expansion of public spending on the general level of prices and its role in causing inflationary gaps in Algeria during the period of implementation of economic programs 2001-2014, by comparing the recorded inflation levels with those targeted, and to study the effectiveness of the inflation targeting policy adopted by Algeria after the issuance of order 10-04 dated August 26, 2010 amended and supplemented by order 03-11 dated August 26, 2003 on cash and loan.
The study found that the policy of expanding public spending adopted by Algeria during the period 2001-2014 generated inflationary effects that pushed inflation rates to levels that exceeded those targets by a deviation of an average of 0.82%, and the results of statistical analysis support this result, as each increase in public investment spending in Algeria by 1 billion Algerian dinars would raise the inflation rate by about 0.06%.