A Dynamic Analysis Of The Impact Of Government Subsidy Policy On Economic Growth In Algeria: An Empirical Study Using The QARDL Model For The Period 1986–2023

Abstract

This study aims to measure the impact of government support on economic growth in Algeria during the period 1986–2023, using a QARDL model, with gross domestic product (GDP) as the dependent variable, and government support (GS) as the main independent variable, while including operating expenditures (FE) and capital expenditures (CE) as explanatory variables. The results revealed a long-run relationship among the study variables across the 0.25, 0.50, and 0.75 quantiles, and the error correction coefficient confirmed the existence of a mechanism of return to equilibrium following short-run shocks. The long-run coefficients indicated that the effect of GS is positive at the lowest quantile, then turns negative at the middle and highest quantiles, while both FE and CE recorded a positive and increasing effect across the quantiles. Diagnostic tests also confirmed that the model is free from serial correlation, heteroskedasticity, and ARCH effects, with valid parametric assumptions and conditional coverage. The study concludes that the impact of government support on economic growth in Algeria is asymmetric, which calls for directing support toward activities with a productive impact.