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

Document Type : Research Paper


Faculty of Economics, Management and business, Tabriz University


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


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