Analyze and measure the relationship between government spending and inflation in Algeria over the long term (1970 - 2015)

Abstract

This study aims to causal relationship between government spending analysis (EXP) and inflation, expressed as a index of consumer prices (CPI) in Algeria during the period (1970 2015) in the short term and the long, for it was the use of standard methods of modern test stability of the strings time and joint integration, model error and correct causal Granger. as the use of  Logarithms all government spending (LEXP), and the index of consumer prices (LCPI).

       The study found that government spending (LEXP) and the index of consumer prices (LCPI) on a common complementary relationship, and that there is a causal relationship of short and long-term trending of government spending (LEXP) to the index of consumer prices (LCPI), where that increased government spending (LEXP) at 1%, increase the index of consumer prices (LCPI) at 0.15%, which means that an increase in government spending leads to a rise in inflation rates in Algeria during the study period