Can Budget Deficits Financing, Crowed Out Private Sector? Comparative Study of the Cases of Iran and Algeria

Abstract

This paper develops an analysis of budget deficit financing in terms<br />of a crowding out or crowding in effect on the activity of the private<br />sector for the economies of Iran and Algeria as two MENA countries,<br />(because of its economic structures (dependence on oil revenue)) during<br />the period 1970-2012 by using Cointegration and Vector Error<br />Correction approaches. The analysis confirms the existence of a<br />crowding out effect in Algeria and a crowding in effect in Iran.