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

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.