Balance of Payments as a Monetary Phenomenon: An ARDL Bounds Test Method for Algeria

Abstract Research background Every country attempts to improve its balance of payments (BOP) position enhance macroeconomic policy. Algeria, like many developing countries, is experiencing a BOP deficit. This raises concerns about the reasons for this deficit and prioritizes quest potential answers. Purpose In context Monetary Approach (MABP), paper investigates long-run relationship between domestic credit, inflation, interest rate, GDP, net foreign assets find whether monetary phenomenon in Algeria from 1980 2019. methodology: The Autoregressive Distributed Lag (ARDL) bounds test, combined with critical approximation p-values Kripfganz Schneider (2020), has been applied. Results findings clearly showed among variables. estimates strongly supported MABP propositions, credit had negative statistically significant influence on assets. suggests that Algeria’s phenomenon, excess money supply played crucial role disequilibrium. Novelty contribution use ARDL test combination novel p -values which provided more robust results. study could help authorities elaborate suitable policies dealing problems Algeria.