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Estimating the New Keynesian Phillips Curve for Tunisia: Empirical Issues

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  • Samir Ben Ali

Abstract

In this paper, we present empirical estimations of the new Keynesian Phillips curve (NKPC) for Tunisia using the generalized method of moments. We study empirical issues related to measuring variables of the theoretical model, and the impact of choices made at this level on its empirical validation. Our results support the hybrid version of the NKPC, with higher fraction of the forward-looking component. In addition, we establish the sensitivity of the estimation results to the choice of the driving variable measure. Our finding is that the success of the output gap variable in the validation of the theoretical relationship is conditional on the implemented measure, and that the deviation of the real exchange rate as a driving variable could be a good choice, due to the openness degree of the Tunisian economy.

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  • Samir Ben Ali, 2013. "Estimating the New Keynesian Phillips Curve for Tunisia: Empirical Issues," Middle East Development Journal, Taylor & Francis Journals, vol. 5(3), pages 1350016-131, January.
    • Handle: RePEc:taf:rmdjxx:v:5:y:2013:i:3:p:1350016-1-1350016-17
    DOI: 10.1142/S1793812013500168
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    1. James M. Nason & Gregor W. Smith, 2008. "Identifying the new Keynesian Phillips curve," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(5), pages 525-551.
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    3. Baghli, M. & Bouthevilain, C. & De Bandt, O. & Fraisse, H. & Le Bihan, H. & Rousseaux, P., 2002. "PIB potentiel et écart de PIB : quelques évaluations pour la France," Working papers 89, Banque de France.
    4. Hilde Bjørnland & Leif Brubakk & Anne Jore, 2008. "Forecasting inflation with an uncertain output gap," Empirical Economics, Springer, vol. 35(3), pages 413-436, November.
    5. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
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    1. Thibault Lemaire, 2020. "Phillips in A Revolution: Unemployment and Prices in Early 21st Century Egypt," Working Papers hal-03948605, HAL.
    2. Tarek Kacemi & Sallahuddin Hassan, 2018. "Inflation dynamics analysis in selected MENA countries," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 6(2), pages :160-168, June.

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