The impact of financial sustainability on export volume: An econometric study using panel models for Algeria and a group of Arab Oil-Growing Countries during the period (2004-2023)

Abstract

This study aimed to assess the impact of fiscal sustainability on the volume of exports, using a panel data approach for Algeria and a group of oil-exporting Arab countries over the period 2004–2023. The analysis was conducted using the Panel ARDL model, which is suitable for examining both short-run and long-run dynamics in panel data settings. The results revealed the existence of a long-run cointegration relationship between fiscal sustainability indicators and the volume of exports (EXP), indicating that these variables move together over time. The study also found statistically significant effects in both the short and long run. Furthermore, the error correction term (Cointeq (-1) = -0.14) was negative and statistically significant, confirming the presence of a short-run adjustment mechanism toward long-run equilibrium. Specifically, about 14% of any short-term deviation from equilibrium is corrected in the subsequent period, suggesting a stable and gradual adjustment process. These findings support the hypothesis that enhancing fiscal sustainability contributes positively to improving export performance, particularly in oil-dependent economies, through better resource allocation and increased macroeconomic stability.