Abstract. This paper investigates whether the growth effects of monetary and fiscal policies in Algeria are regime dependent, with particular emphasis on monetary–fiscal policy coordination. Using quarterly data for 1990Q2–2025Q4, we first estimate a baseline linear model and formally test for parameter instability. Structural-break diagnostics (Quandt–Andrews and Chow tests) strongly reject coefficient constancy, indicating that Algeria’s growth process is characterized by discrete shifts that cannot be adequately captured by a single linear specification. Motivated by this evidence, we estimate a two-regime Markov-Switching Dynamic Regression model in which the intercept, policy coefficients, and error variance vary across regimes, while external controls are kept common across regimes. The Markov-switching model provides a substantially better fit than OLS and identifies two persistent regimes that differ in baseline growth and volatility. The central result is that monetary–fiscal policy coordination—measured by the interaction between lagged fiscal and monetary policy indicators—has a positive and statistically significant effect on GDP growth in both regimes, but the effect is markedly stronger the lower-growth, crisis-related regime. Transition probabilities imply long expected durations in both regimes, and smoothed regime probabilities align closely with major shock episodes, notably the 2014 oil-price collapse and the 2020 COVID-19 shock. Overall, the findings highlight the importance of institutionalized policy coordination frameworks, particularly during adverse macroeconomic conditions, while underscoring the growth costs associated with inflationary pressures.

Keywords: Algeria, economic growth, monetary policy, fiscal policy, policy coordination, Markov-switching, structural breaks.