Tunisia Monetary Policy Since the Arab Spring: The Fall of the Exchange Rate Anchor and Rise of Inflation Targeting

End, Nicolas; Khatat, Mariam El Hamiani; Kolsi, Rym

doi:10.2139/ssrn.3721191

Cited by 4 publications

(7 citation statements)

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“…This pass-through effect led to a broad-based increase in prices across the economy, resulting in higher inflation (as demonstrated by Jbir and Zouari-Ghorbel, 2009;Guenichi and Benamou, 2010;Helali and Kalai, 2015;El-Hamiani, 2018). A relative decrease in the impact of oil prices on inflation from 2019 to 2022 can be attributed to several factors as suggested by Gritli (2021) and El-Hamiani et al (2020): monetary policy measures; government subsidies; demand-supply dynamics; and structural reforms.…”

Section: Resultsmentioning

confidence: 95%

Modelling Inflation Dynamics and Global Oil Price Shocks in OAPEC Countries: TVP-VAR

Elsherif

2024

IJEEP

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This paper aims to examine the dynamic pass-through effect of oil price shocks on inflation in OAPEC countries using quarterly data ranging from 1990:Q1 to 2022:Q4. The incorporation of the TVP-VAR model along with the Markov Chain Monte Carlo method with stochastic volatility estimation offers a robust framework for capturing the time-varying nature of the relationship. Additionally, the analysis of the Impulse Response Function provides valuable insights into the short-term and long-term dynamics following oil price shocks. The results demonstrate a significant positive pass-through effect of oil prices on inflation in the sample member states, with heterogeneous magnitude and persistence. These variations are attributed to diversity in oil dependency, exchange rate regimes, monetary policy frameworks and the degree of openness to global markets. The study suggests the need for effective inflation management strategies and appropriate policy responses to oil price fluctuations. Furthermore, policymakers may consider adjusting exchange rates, interest rates, or trade policies to manage inflationary pressures effectively.

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Section: Resultsmentioning

confidence: 95%

Modelling Inflation Dynamics and Global Oil Price Shocks in OAPEC Countries: TVP-VAR

Elsherif

2024

IJEEP

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“…Empirical studies draw representative conclusions about the IT transition feasibility in Tunisia. Results are promising: IT should be the future of the Tunisian monetary policy (El Hamiani Khatat et al , 2020). However, inflation should not be viewed as the only widespread matter.…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, monetary targeting has had only limited success because the demand for money is often unstable, due to innovations in financial markets (Arbouch, 2022). Exchange rate targeting does not bring satisfying results in terms of price stability, especially with the current account deficit and increase in international reserves (El Hamiani Khatat et al , 2020).…”

Section: Introductionmentioning

confidence: 99%

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Monetary policy and inflation targeting under global uncertainty: a SVAR approach for Tunisia

Trabelsi,

Ben Khaled

2023

JFEP

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Purpose The implementation of monetary policy by the central bank is an ongoing topic of discussion. This paper aims to explore monetary policy transmission shocks in times of uncertainty using the new World uncertainty index (WUI). The authors investigate the impact of crises, wars and pandemic shocks on selected macroeconomic variables. Design/methodology/approach The authors use unit root tests, structural vector autoregressive model and the Granger causality test according to Toda–Yamamoto with quarterly data over 1999–2022. Findings The results of this study show that in the short run, there is a unidirectional relationship between the money market rate and WUI, while the relationship between the latter and the money supply (M2) is bidirectional. The short-term effect runs from WUI to inflation. In the long run, the variance decomposition shows that global uncertainty explains around 12% of inflation pressures. The uncertainty caused by special events in the world creates positive shocks on inflation in Tunisia, which decreases the ability of the central bank to control inflation. Research limitations/implications The results have implications over necessary and urgent actions to be implemented for a progressive economic recovery but point to a necessary transition to an inflation-targeting regime. Originality/value Examining monetary policy under uncertainty is a recent phenomenon. The authors purposely use a novel WUI by Ahir et al. (2022) that is unexploited in literature.

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“…Most of the works carried out on the study of the monetary targeting strategy in Tunisia has shown the failure of this strategy due to: (i) The poor choice of the aggregate targeted by the TCB as an intermediate objective (Najeh and Bouaziz, 1990;Najeh and Kria, 1991;Zouari, 1991;Najeh, 1996;; (ii) Or the instability of the adopted currency demand functio (End et al, 2020) n.…”

Section: Selected Empirical Literaturementioning

confidence: 99%

Revisit of Tunisia’s Money Demand Function: What About Oil Price and Exchange Rate Effects?

Neifar¹,

Kammoun²

2022

IJEFI

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This paper examines the long run and short run dynamic relationship between real broad money and macroeconomic factors in Tunisia for the period 2010M01 to 2019M07. We employ linear and NARDL bound testing approach for co-integration between the money demand measure and its determinants. Three real broader money demand variables (M2, M3, and M4) are considered to show that exchange rate have asymmetric significant effects once we introduce nonlinearity in the long run as well as in the short run association. Then, by using the (Shin et al., 2014) NARDL approach, we show that currency appreciation and depreciation could affect the demand for money in an asymmetric manner. However, in the long run, it is only the oil price and Tunisian Dinar (TD) depreciation and appreciation which have significant effect out of the five considered macroeconomic factors (real income, interest rates, inflation, oil price, and the exchange rate). Besides, the QSUMSQ stability tests results reveal that only real M3 money demand function which is clearly stable. In implementing monetary policy, the Tunisian central bank (TCB) should target the M3 monetary aggregate and take into account of the exchange rate changes stabilization.

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Tunisia Monetary Policy Since the Arab Spring: The Fall of the Exchange Rate Anchor and Rise of Inflation Targeting

Cited by 4 publications

References 0 publications

Modelling Inflation Dynamics and Global Oil Price Shocks in OAPEC Countries: TVP-VAR

Modelling Inflation Dynamics and Global Oil Price Shocks in OAPEC Countries: TVP-VAR

Monetary policy and inflation targeting under global uncertainty: a SVAR approach for Tunisia

Revisit of Tunisia’s Money Demand Function: What About Oil Price and Exchange Rate Effects?

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