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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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Submitted on : Tuesday, January 18, 2011 - 10:17:12 AM
Last modification on : Thursday, September 26, 2019 - 4:29:24 PM
Document(s) archivé(s) le : Tuesday, April 19, 2011 - 2:47:13 AM


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  • HAL Id : halshs-00556935, version 1


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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