Test of causality between oil price and GDP growth in Algeria

Abstract

This paper seeks to investigate the causal relationship between oil prices and economic growth in Algeria. The empirical analysis starts by analyzing the time series properties of the data which is followed by examining the nature of causality among the variables. Algeria is an oil-producing rather oil-exporting country. An increase in oil price increases economic growth. This study analyzes how change in real crude oil price affects the real GDP of Algeria positively. The empirical analysis involves testing the time series characteristics of the data series (stationary) using ADF test and running the pairwise Granger causality test based on EViews software.