The Impact of Oil Price Shocks on Economic Growth in Algeria: An Asymmetric Analysis for 2000–2023 Using the NARDL Model

Abstract

This study analyzes the impact of oil price shocks on economic growth in Algeria during 2000–2023 using the NARDL model, focusing on the asymmetric nature of these effects. Results indicate a long-term cointegration between economic growth and oil price shocks, with greater sensitivity to positive shocks compared to negative ones. Positive oil price shocks have a stronger and significant effect on growth in both the short and long term, while negative shocks exert a smaller impact. The findings highlight that Algeria’s heavy reliance on oil makes its economic growth vulnerable to price volatility, particularly during downturns. The study recommends enhancing economic diversification, establishing a sovereign wealth fund, adopting counter-cyclical fiscal policies, improving investment efficiency, stabilizing monetary policy, promoting renewable energy, and developing forecasting and risk management capacities, alongside strengthening governance. This research contributes to understanding the asymmetric relationship between oil prices and economic growth, providing practical policy recommendations to enhance Algeria’s economic resilience against global oil price fluctuations.