Public investment spending in Algeria in light of the fluctuation of oil revenues during the period 1990-2016

Abstract

Funding for major projects in Algeria depends on the revenues from hydrocarbons, including oil ; Although this is not considered safe due to price fluctuations in the global market,

This paper is a study to study the problem of fluctuations in oil revenues and the extent of their impact on government spending in Algeria, through the use of error correction models to study the relationship between oil revenues and the size of government investment spending represented in the total supply expenditures during the period 1990-2016,

The result of this research was that the change in oil revenues by one unit followed by a change in investment spending by 32%, which is a weak amount, and this is due to the fact that oil revenues alone are a small percentage compared to the total fuel revenues, adding to this insufficiency to cover investment spending in Algeria,

As for the estimates of the response functions spanning 10 years, the occurrence of any shock in the oil revenues and the amount of one standard deviation affects directly the public investment spending in the first year, then it increases steadily towards stability at the end of the eighth period, and this effect is statistically significant.