Keyword

Inflation, Purchasing Power, Consumption Price Index, Range Effect, Leverage Effect, Auto- Regressive Vector Method.

Abstract

As Algeria is an oil-rich country having its revenues entirely linked to hydrocarbon exports, tensions in the oil market might engender risks of macroeconomic imbalances. Bearing in mind the importance of oil for the world economy and its fallout during a prolonged surge of its prices, it would be interesting to investigate the relationship inflation-oil prices, which is a point of contrast among economists. At first, we will display theoretical background of inflation and the inflation patterns in Algeria, before putting evidence of strategic issues of the oil revenues in Algeria. We will finish by an econometric analysis via a VAR model of the eventual relationship between oil prices and inflation in Algeria. This article aims to answer the question: “What’s the impact of oil price fluctuations on inflation in Algeria?


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