Threshold effects of inflation on the financial development-economic growth nexus in Tunisia

Helali, Kamel; Jedidia, Khoutem Ben; Boujelbene, Thouraya

doi:10.1504/ijmef.2021.118282

Cited by 3 publications

(7 citation statements)

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“…Therefore, our results support the idea of a non-linear relationship between financial development, inflation and economic growth. This evidence is consistent with previous studies such as those by Njindan & Odhiambo (2017), Ben jedidia et al (2014& 2019 and Helali et al (2021).…”

Section: Modelssupporting

confidence: 94%

“…However, the inflation rate remains at a level comparable to that observed in its European economic partners, recording a remarkable decline from 6.3% in 1995 to 3.1% in 2007. Since 2008, the inflation rate has experienced a remarkable increase reaching 7.5% in 2018 while the GDP per capita growth rate evolves from 5.21% in 2007 to -1.68% in 2011 and 2.5% in 2018 (Helali et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

“…Then, since the January 2011 revolution, the fragile economic situation and high inflation rates led to a weak mobilization of deposits and several Tunisian banks found themselves in a situation of insufficient liquidity and increasing dependence on direct refinancing by the Central Bank of Tunisia (IMF National Report, 2015;Helali & Kalai, 2015;Helali, 2020;Helali et al, 2021) which prompted the CBT to decrease its nominal rate by 100 basis points, from 4.5% to 3.5% with the reduction of the required reserve ratio of commercial banks from 12% to 2% and giving 2.6 billion dollars to commercial banks to boost liquidity (Matta et al, 2019). The aim was to reduce the financial burden on companies, especially those affected by the effects of the political crisis, and to increase the liquidity of financial intermediation.…”

Section: Introductionmentioning

confidence: 99%

“…Indeed, we study how variations in inflation can affect the relationship between financial development and economic growth. Moreover, the relationship between financial development and economic growth in the Tunisian case is still limited and previous ones have studied this relationship through linear models and found a positive relationship between them (Ghali, 1999;Boulila & Trabelsi, 2004;Ben Jedidia et al, 2014) and only Helali et al (2021) studied this relationship through a Threshold Regression (TR) model.…”

Section: Introductionmentioning

confidence: 99%

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Smooth transition regression model relating inflation to economic growth in Tunisia

Becha

Kalai

Helali

2023

Preprint

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This paper examines the nature of the relationship between financial development and economic growth between 1965 and 2019, using the non-linear logistic smooth transition regression model and considering inflation as a threshold financial development. The results show the existence of a non-linear abrupt relationship with an inflation threshold equal to 3.63%. Specifically, when inflation is below 3.63 percent, all variables, including inflation, have a significant and positive impact on economic growth. However, when inflation exceeds the estimated threshold, inflation has a significant and negative impact with an elasticity equal to -0.365. Therefore, it is necessary to apply such measures to reduce the inflation pressures and promote economic growth through development finance by the banking sector. JEL Classification: C24; E31; E44; O11.

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Section: Modelssupporting

confidence: 94%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Smooth transition regression model relating inflation to economic growth in Tunisia

Becha

Kalai

Helali

2023

Preprint

Self Cite

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“…Multiple studies have shown that inflation and oil prices positively impact the growth rate of different nations (Uddin, 2021;Jassim et al, 2021;Dinh, 2020). Several studies have shown a negative correlation between oil prices and inflation rates (Xia, 2021;Batrancea, 2021;Helali et al, 2021). Several studies point to an asymmetric effect (Rumbia et al, 2020;Chugunov et al, 2021).…”

Section: Literature Review On the Impact Of Industrial Value-added An...mentioning

confidence: 99%

Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth

Triantoro

Akhtar

Khan

et al. 2023

IJEEP

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Oil price fluctuations have always been controversial and remain significant in how a country's economy develops. It is especially easy for the worldwide price of natural resources to fluctuate, putting developing nations at risk of economic instability. Consider Pakistan's economy, which is very sensitive to changes in oil prices due to its reliance on the commodity. This research analyses the effects of oil prices on several macroeconomic indicators, including inflation, imports, gross savings, domestic lending to the private sector (DCPS), and industrial value-added in Pakistan. The study uses an error-correcting framework known as autoregressive distributed lag (ARDL) modelling to examine long-term connections between variables and their short-term implications. Additionally, data acquired between 1970 and 2020 was analyzed using Granger causality tests, impulse response functions (IRFs), and variance decomposition analyses (VDAs). The study found that inflation and domestic loans to the private sector hampered economic development in the near run. Conversely, imports, gross savings, industrial value added, and oil rents have a positive effect. A long-term connection between these variables was verified using the boundaries test. A unidirectional link was found in the causality tests between economic growth and imports, inflation and economic growth, and gross saving and domestic credit. An inverse link between domestic credit and inflation was found. The effect of oil rents on economic development in Pakistan is expected to rise during the next four years, according to the forecasts, before levelling out. According to the VDA results, the most critical factor influencing Pakistan's economic development over the next decade would be domestic lending to the private sector. Following these empirical results, the study proposes policy adjustments that might help Pakistan's economy expand more quickly and sustainably.

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Investigating the relationship between inflation and economic growth in Mauritania: an empirical analysis using the regime change model

Ben Abdallah,

Guidara,

Aloulou

et al. 2023

SN Bus Econ

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Threshold effects of inflation on the financial development-economic growth nexus in Tunisia

Cited by 3 publications

References 0 publications

Smooth transition regression model relating inflation to economic growth in Tunisia

Smooth transition regression model relating inflation to economic growth in Tunisia

Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth

Investigating the relationship between inflation and economic growth in Mauritania: an empirical analysis using the regime change model

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