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On the link between real effective value of Tunisia’s Dinar and its sectoral trade with the rest of the world: New evidence from asymmetry analysis

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  • Bahmani-Oskooee, Mohsen
  • Hadj Amor, Thouraya
  • Maki Nayeri, Majid
  • Niroomand, Farhang

Abstract

Application of the linear ARDL approach to the aggregate trade balance of Tunisia with the rest of the world reveals no significant relation between the trade balance and real effective exchange rate of dinar. However, the nonlinear ARDL approach reveals that while dinar depreciation will improve the trade balance of Tunisia, dinar appreciation will have no effect, a strong sign of asymmetric effects. Disaggregation by sectors and application of both approaches reveal that while dinar depreciation will benefit Food, Wood and Papers, Steel, and Electronic sectors, dinar appreciation will hurt Energy, Food, Wood and Paper, Mechanical, and Electronic sectors, all in an asymmetric manner. We also found that dinar appreciation will benefit two small sectors, Steel and Nonferrous Metals.

Suggested Citation

  • Bahmani-Oskooee, Mohsen & Hadj Amor, Thouraya & Maki Nayeri, Majid & Niroomand, Farhang, 2019. "On the link between real effective value of Tunisia’s Dinar and its sectoral trade with the rest of the world: New evidence from asymmetry analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 111-118.
    • Handle: RePEc:eee:quaeco:v:73:y:2019:i:c:p:111-118
    DOI: 10.1016/j.qref.2018.05.006
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    Cited by:

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    2. Nakhli, Mohamed Sahbi & Gaies, Brahim, 2021. "Political risk and financial development in Nigeria: Can credit buy social peace?," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 55-62.

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    More about this item

    Keywords

    Tunisia; Sectoral trade balances; Non-linear ARDL approach; Asymmetry effects;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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