Buoyant Capital Spending and Worries over Real Appreciation: Cold Facts from Algeria - HAL-SHS - Sciences de l'Homme et de la Société Access content directly
Preprints, Working Papers, ... Year : 2011

Buoyant Capital Spending and Worries over Real Appreciation: Cold Facts from Algeria

Abstract

The Government of Algeria has pursed a relatively expansionary fiscal policy in recent years, thanks to rising oil prices and revenues. The paper explores the potential effects of such a stance on real exchange rate and uncovers a relatively small appreciating effect of increased government capital expenditure. This is explained by the fact that a significant share of capital spending falls into tradable imported goods. However, the envisaged increase in capital spending, if well designed and implemented, might in the long-run translate into rising operations and maintenance expenditure—mostly nontradable goods—thereby causing a higher real appreciation. This implies that Algeria should carefully consider the implications of its public investment program on recurrent expenditure.
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Dates and versions

halshs-00556935 , version 1 (18-01-2011)

Identifiers

  • HAL Id : halshs-00556935 , version 1

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Kangni Kpodar, Boileau Loko, Oumar Diallo. Buoyant Capital Spending and Worries over Real Appreciation: Cold Facts from Algeria. 2011. ⟨halshs-00556935⟩
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