A nonlinear approach to estimating the impact of the central bank independence on the effectiveness of monetary policy in Algeria for the period (1990-2021) في الجزائر للفترة (1990 - 2021 ) مقاربة لا خطية لتقدير مدى تأثير استقلالية البنك المركزي على فعالية السياسة النقدية

Abstract

The purpose of this study is to estimate the impact of the Central Bank independence on the effectiveness of monetary policy in stabilizing inflation rates by using the Markov Switching regimes, for the case of Algeria, between 1990 and 2021. The study concluded that the Bank of Algeria's independence is an important factor in enhancing the effectiveness of monetary policy in Algeria, with results (under both of regimes: price stability and price volatility) showing that the independence of the Bank of Algeria and that the nominal effective exchange rate and the rediscount rate have a negative impact. Thus, inflation is affected negatively when the exchange rate depreciates, causing inflation to rise (the pass-through effect is significant), and inflation is reduced when the rediscount rate is increased. Besides, the rise in oil prices was observed to have a positive effect on inflation.