The Effect of Unconventional Monetary on the Algerian Economy: An Empirical Study

Abstract

Algeria resorted to the option of unconventional monetary policy (Printing Money), where it printed 2189 billion DZ during September and November 2017 representing 15% of GDP compared to 30% and 21% for more than 8 years in both the United State and the European Union. The goal of this study to investigate of unconventional monetary policy on the Algerian economy, and exactly the output and the price gap, using the co-integration relationship and SVARX model. Results show that management money behavior in Algeria generally provoke a positive response on CPI and a slowdown   in the output gap, which implies that a negative response and a relative economic recession from the money supply during the period shock.