Econometric study using cointegration with structural breaks

Abstract

This study aims to determine the optimal size of government spending in Algeria during the period 1970-2019, following the methodology of Scully (1998, 2003) and based on the Gregory-Hansen cointegration technique, the study found that the optimal size of government spending is estimated at 26.90%, which indicates The government spending in Algeria was working outside its efficiency in most of the study periods and did not contribute to improving economic growth rates, so the government must reduce unnecessary government spending and transfer it towards development spending.