Economic studies

Analysis of interactions between fiscal policy and monetary policy in Algeria

Authors: Djaballah Mustapha - Bissar Abdelmoutaled

Abstract

Fiscal policy can impact the conduct of monetary policy through multiple channels. Indeed, the increase in public spending short-term demand, while long-term investments act on the production path of the economy and, ultimately, on the trajectory future of inflation. For its part, monetary policy, through the interest rates, would also affect the refinancing costs of the Treasury public, and hence on the level of the budget deficit and to some extent on the sustainability of the public debt. In a context where central banks have strengthened their independence towards a governments, the interactions between the monetary policy and fiscal policy can only increase as economic developments lead them to opposite choices. The objective of this paper is to analyze the interactions between fiscal policy and monetary policy in Algeria.

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