Trade-threshold Effect on Inflation in Tunisia: New Evidence Resulting from a Nonlinear Approach

Jedidia, Khoutem Ben; Dammak, Thouraya Boujelbène; Helali, Kamel

doi:10.1080/10168737.2019.1581246

Cited by 11 publications

(6 citation statements)

References 30 publications

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“…This lessens the monetary authorities' incentive to implement expansionary monetary policy. Moving on this phenomenon, open economies are expected to have lower inflation and several studies support the negative relationship between trade openness and inflation like Haq and Zhu (2016), Lin et al (2017), Bowdler and Malik (2017), Jedidia et al (2019), Bosnjak et al (2022) and Hassan (2022). All of the above studies focus that trade openness being likely to negatively influence inflation through increased competition, reducing the cost of production over imported innovation, more exports, increase in FDI, and efficient allocation of resources.…”

Section: Introductionmentioning

confidence: 94%

Revisiting the Romer’s Hypothesis and Openness and Inflation Relationship for Pakistan

Munir¹,

Tufail

Ahmed

2023

GUJR

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The substantial economic integration coupled with the increased inflation becomes serious dilemma for developing economies. Inflation has recently emerged as the major economic issue, making it necessary to investigate the additional causes of this issue. This study revisited the age-old subject of how openness affects inflation, utilizing time-series data from 1990 to 2021 for Pakistan. Primary goal of study is to investigate Romer hypothesis and relationship between openness as well as inflation in Pakistan using Co-integration analysis. Other explanatory variables are the growth of real agriculture value added, an average annual growth rate of money, and quasi-money and openness of economy. Though openness and inflation have a positive long-run relationship, there is no evidence of a short-run relationship, refuting Romer's argument for Pakistan. Present study offered signifncant information through results and support from previous studies in reaching the conclusion about inflation and its main reasons behand. Additionally, it offers renewed perspectives on how inflation is affected by global economic integration and how it thus undesarbaly influenced the financial growth from different dimensions that further hinders sustainable development.

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Section: Introductionmentioning

confidence: 94%

Revisiting the Romer’s Hypothesis and Openness and Inflation Relationship for Pakistan

Munir¹,

Tufail

Ahmed

2023

GUJR

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“…On the other hand, the debate surrounding trade openness and inflation is still inconclusive. One arm has found that trade openness positively affect inflation [19], while the other arm found the opposite [15,20] and others found mixed results and others no significant relationship [21][22][23]. Studies below will provide an overview about the study variables in this study.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In order to understand the effect of Trade-threshold on inflation in Tunisia, [21] employed both linear and Nonlinear Approach in their study. The linear approach found a positive and significant relationship with inflation.…”

Section: Literature Reviewmentioning

confidence: 99%

Trade Openness and Crude Oil Price Effects on Food Inflation: Examining the Romer Hypothesis in Kenya

Lidiema¹

2020

JWER

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Food Prices accounts for about 36% of the overall consumer price index in Kenya and it's the single largest of the 12 components that make up the index. Therefore, shocks in food prices could considerably be transmitted to the overall consumer price index. While Kenya agricultural production is heavily rain-fed, external pressures from and shocks from crude oil price, international trade are transmitted inwards and pile more pressure on food prices as well. While inflation tend to follow all the available information in the market and business per the rational expectations' theory, price factors are a key determinant of business cycles, because price stickiness tend to drive demand. Therefore, demand for food products could be driven by several market features including internal food prices, oil prices, productions and importation costs. The objective of this research was to analyze the effect of Trade openness on food inflation in Kenya with a view of establishing if Romer's hypothesis holds in Kenya. The second objective is to establish the effect of crude oil prices on food inflation in Kenya. The study employed Autoregressive Distributed Lag (ARDL) cointegrating technique to estimate both short-run and long run estimates. The study findings indicate that trade openness significantly has a reducing influence on food inflation hence confirming the existence of Romer's hypothesis in Kenya. Secondly, crude oil prices have a positive and significant effect on food inflation. Interestingly, the study found that money supply does not have significant influence on food inflation. The study recommends embracing and adopting international free trade agreements to further leverage on imports prices, increase buffer storage to cushion against food demand and hence stabilize food prices. Secondly the government should enhance further price controls on oil prices to reduce spillovers to food production and supply costs. In addition, Kenya should develop technologies to improve agricultural farm production to leverage dependence of rain-fed agricultural sector.

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“…In the same way, the inflation rate has increased outstandingly and Tunisia's trade openness has, nevertheless, declined due to internal factors such the increase of strikes and sit-ins, the decline of investment, the reign of insecurity and the high economic uncertainty. Furthermore, the Tunisian dinar was depreciated by 51.93% during the period from January 2012 to January 2018 with respect to the Euro, which stimulated the inflationary process (Ben Jedidia et al, 2019).…”

Section: Figure 3: Estimated Transition Function Of the Str Model For...mentioning

confidence: 99%

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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Trade-threshold Effect on Inflation in Tunisia: New Evidence Resulting from a Nonlinear Approach

Cited by 11 publications

References 30 publications

Revisiting the Romer’s Hypothesis and Openness and Inflation Relationship for Pakistan

Revisiting the Romer’s Hypothesis and Openness and Inflation Relationship for Pakistan

Trade Openness and Crude Oil Price Effects on Food Inflation: Examining the Romer Hypothesis in Kenya

Smooth transition regression model relating inflation to economic growth in Tunisia

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