Dynamic Effect of Government Expenditure on Unemployment in Algeria: A Structural Vector Autoregressive Approach 1970-2018

  • Manel Attouchi Djillali Liabes University of Sidi Bel Abbes, (Algeria),
  • Mohamed Driouche Dahmani Djillali Liabes University of Sidi Bel Abbes, (Algeria),


This study investigates the effect of fiscal policy shocks on unemployment in Algeria, using Structural Vector
Autoregressive (SVAR) methodology over the period 1970-2018. The results indicate that one shock in
public spending with 1% will have a significant and positive effect on unemployment rate this shock will
generate a decline in unemployment rates, however, the response to government revenue was negative and
slight, while those impacts are asymmetric the effect of public spending shock is stronger than revenue
shock, therefore this asymmetry appears in recession period. The study suggests that government should reorientate
their expenditure in order to encourage job creation and responding to the needs of the labor