The impact of the increase in the price of hydrocarbons on the Algerian economy in the context of the Dutch disease: a calculable general equilibrium model

Abstract

The term “Dutch disease” is not new, but still remains one of the hot topics that reappear in Algeria each time the price of hydrocarbons decreases or increases. Our study starts from an assumption that the rise in the price of hydrocarbons will always have negative effects on the Algerian economy due to the deterioration of certain productive activities, in addition to the rise of the real exchange rate, the creation of a consumer society and the migration of labor to expanding sectors, all of which are synonymous with the Dutch disease. By using the calculable general equilibrium model, and the inclusion of oil rent as one of the production factors which is redistributed equally, and by building the model database via the social accounting matrix, we were able to simulate the increase in the price of hydrocarbons and to solve various non-linear equations with the Mat lab program; which leads to validating the hypothesis and concluding with a number of results and recommendations.