Long and Short-Term Effects of Fiscal Policy on Economic Diversification in Algeria during the Period 2000-2020

Abstract

The study aimed to analyze the long and short-term effects of fiscal policy on economic diversification in Algeria during the period 2000-2020, using the Herfindahl-Hirschman index as a dependent variable and public expenditures and revenues as independent variables, using the ARDL model.

The results of the bounds test showed a long-term equilibrium relationship between fiscal policy and economic diversification, as well as a significant negative long-term effect of public expenditures on the Herfindahl-Hirschman index. Specifically, a 1% increase in public expenditures resulted in a 0.001% decrease in the Herfindahl-Hirschman index. The study also found a positive effect of public revenues on the Herfindahl-Hirschman index, with a 1% increase in public revenues resulting in a 0.0001% increase in the index.