Abstract

This study aims to measure the relationship between credit revenues as a means of financing the public budget deficit and the inflation rate in Algeria during the period (1997–2023), in order to determine the effects of credit-based means of financing the public budget deficit on rising inflation rates in both the long and short term in Algeria.

The study found a long-term positive equilibrium relationship between external financing of the public budget deficit and inflation. Accordingly, the Algerian state's recourse to external financing to cover the public budget deficit leads to an increase in inflation rates in the Algerian national economy. Furthermore, 227.9% of short-term errors can be corrected annually in order to return to the long-term equilibrium situation.