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Analysis of the relationship between the optimal level of public spending and economic growth Evidence and experimental study on Algeria

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  • Mohammed BENAZZA

    (University Centre of Maghnia, Algeria)

  • Djahida LAYATI

    (University of Tlemcen, Algeria)

Abstract

This paper discusses the optimal level of public spending in Algeria, over the period 1990-2021, employing both descriptive and quantitative methods, with a particular focus on the Autoregressive Distributed Lag (ARDL) approach and the hypotheses underlying the "Armey" curve. The findings reveal that Algeria's public spending exceeds the level suggested by the "Armey" curve, suggesting that the country's large government size is hindering economic growth. In other words, Algeria's spending surpasses what is required for optimal growth, thereby obstructing economic growth.

Suggested Citation

  • Mohammed BENAZZA & Djahida LAYATI, 2025. "Analysis of the relationship between the optimal level of public spending and economic growth Evidence and experimental study on Algeria," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(643), S), pages 313-327, Summer.
    • Handle: RePEc:agr:journl:v:xxxii:y:2025:i:2(643):p:313-327
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    References listed on IDEAS

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    2. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    3. Pesaran, M.H. & Shin, Y., 1995. "An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis," Cambridge Working Papers in Economics 9514, Faculty of Economics, University of Cambridge.
    4. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    5. Ayşegül Durucan, 2022. "Testing The Validity Of The Bars Curve For Turkey," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(232), pages 153-192, January –.
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