The impact of liquidity on the Algerian economy

Abstract

The purpose of this study was to investigate the effect of liquidity in Algeria. Using the following economic variables: M1 and M2 money supply, interest rate, the general index of consumer prices, and deposits. According to the monthly data of the State of Algeria from December 2001 to December 2014. And to determine the impact of growth in money supply to interest rate model was used autoregressive record .When the statistical results show that we managed using EViews 6 .As the dependent variables are not stable in the zero degree when it becomes stable when the variables is the first difference means they are part of the first class, using the ADF test and PP, and then subjecting the cointegration test variables so Angel Granger, and test the stability of residues and found that it is not stable any residual non-free unit root, and to ensure cointegration we tested for cointegration Johansson way. there is no cointegration  between the variables, and show that there is a dynamic relationship between interest rates in the short term and explanatory variables .And that the reference was compatible with what has been imposed in the estimation of the model under consideration, and this is supported by economic theory. Since the liquidity effect represented in each of M1 and M2 money supply. And also the quality of the relationship between the dependent variable and the rest of independent variables, which explained that the inverse relationship to interest rates. And so we can say that there is the impact of liquidity and are not neutral