The relationship between public finance governance indicators and public expenditure rationalization in Algeria during the period (1996-2023): an empirical study

Abstract

This paper aims to examine the relationship between global financial governance indicators and public expenditure rationalization in Algeria during the period (1996–2023), using annual data and relying on the ARDL model to test the existence of a long- and short-term relationship between the study variables. The study found a cointegration relationship between the contribution of public expenditure to GDP (EXP/GDP) and global financial governance indicators, as indicated by the results of the bound test approach for cointegration through the calculated F-statistical value, which was greater than the upper critical limits at a significance level of 10%. The study also indicated a strong positive effect of the government effectiveness index and the Voice and Accountability index on the contribution of public expenditure to GDP in the long run, and a negative effect of both the Regulatory Quality index and the control of corruption index on the contribution of public expenditure to GDP in the long run.