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Frequency Domain Causality Relationship Analysis Between Poverty, Economic Growth And Financial Development In Algeria

Author

Listed:
  • AYAD HICHAM

    (University Center of Maghnia, Tlemcen, Algeria)

  • BELMOKADDEM MOSTEFA

    (Abu Bakr Belkaid university, Tlemcen, Algeria)

  • SARI HASSOUN SALAH EDDIN

    (Abu Bakr Belkaid university, Tlemcen, Algeria)

Abstract

Since the previous periods, poverty reduction has been a big concern for many countries especially in developing countries like Algeria; in this paper, we shall explore the causal relationship between poverty reduction, economic growth and financial development in Algeria during the period of 1970-2017, the aim of this research is to answer the question which sector causes the poverty reduction: real sector or financial sector? Therefore, we employed the modern frequency domain causality presented by Breitung and Candelon (2006) with a comparison with the time domain causality under Lutkepohl (2006) procedure, the results suggest that there is unidirectional causality running from the real sector (economic growth) to poverty rates in the short and long run terms, also, we found that there is an unidirectional causality running from the financial sector to poverty rates only in the long run term, while another causality running from poverty rates to the financial sector but in the short run term. This article aims at contributing to enlarge the literature review by utilizing the frequency domain causality in the field of poverty studies because of its effectiveness to test the causalities in different frequencies.

Suggested Citation

  • Ayad Hicham & Belmokaddem Mostefa & Sari Hassoun Salah Eddin, 2019. "Frequency Domain Causality Relationship Analysis Between Poverty, Economic Growth And Financial Development In Algeria," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 24, pages 93-111, December.
    • Handle: RePEc:aic:revebs:y:2019:j:24:hichama
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    Keywords

    Poverty reduction; Economic growth; Financial development; Time domain causality; Frequency domain causality.;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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