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Diagnosis of Monetary Policy in Tunisia During the Last Decade: a DSGE Model Approach

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  • Kawther Alimi

    (Faculty of Economics and Management of Sfax)

  • Mohamed Chakroun

    (Faculty of Economics and Management of Sfax)

  • Grégory Levieuge

    (Faculty of Economics and Management of Sfax)

Abstract

This paper intends to analyze the dynamics of monetary policy in Tunisia during the last decade. In particular, we seek to explain the main factors that have hindered the achievement of the paramount objective of the monetary authority to stabilize prices. To do this, we used a dynamic stochastic general equilibrium (DSGE) model, of a small open economy. The model is estimated by using Bayesian techniques and includes three different types of structural shocks. We found that the output gap is less sensitive to interest rates, which reduces the impact of the real effects of the monetary policy shocks on aggregate demand. Moreover, Tunisia’s central bank has not followed during the 2000s an offensive and stabilizing monetary policy, given that the nominal interest rate reacts less to inflation deviations from its target and actively to fluctuations in production from its retarded level.

Suggested Citation

  • Kawther Alimi & Mohamed Chakroun & Grégory Levieuge, 2019. "Diagnosis of Monetary Policy in Tunisia During the Last Decade: a DSGE Model Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 348-364, March.
    • Handle: RePEc:spr:jknowl:v:10:y:2019:i:1:d:10.1007_s13132-017-0455-3
    DOI: 10.1007/s13132-017-0455-3
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    1. Kawther Alimi & Mohamed Chakroun, 2022. "Wage Rigidity Impacts on Unemployment and Inflation Persistence in Tunisia: Evidence from an Estimated DSGE Model," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(1), pages 474-500, March.

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