The impact of government size on economic growth in Algeria: a threshold analysis

This paper aims to examine the growth-government spending nexus for Algeria. Our empirical investigation follows endogenous growth literature by using GDP rate as dependent variable and government expenditure a share of main explanatory variable. We then perform Hansen’s (2317) regression kink model with an unknown threshold estimate optimal size during period 1973-2020. The obtained results confirm validity Armey curve hypothesis in case Algeria, suggest estimated that maximizes economic around 30.4 percent GDP. Accordingly, since Algeria has attained its level size, it seems be more important authorities improve efficiency expenditure.