Tunisia after the 2011’s revolution: Economic deterioration should, and could have been avoided

The political instability and social unrest in Tunisia since 2011, generated a short-term foresight of the macroeconomic management which contributed to the deterioration of the country’s macroeconomic fundamentals. The objective of this paper is to provide the policy makers with quantitative arguments showing the importance to undertake the macroeconomic stabilization and the structural reforms that improve the total factor productivity, one of the main engines of a sustained economic growth. To that end, the paper employs a financial dynamic general equilibrium model calibrated using six flow-of-funds accounts representing the Tunisian economy in 2010. In a first stage, I reproduce the main macroeconomic variables observed for the Tunisian economy over 2011–2018. In a second stage, the model is used to compare the impacts of counterfactual policy scenarios on the Tunisian macroeconomic performance. The results show that the economy could perform much better, in relation to a battery of macroeconomic indicators (economic growth, unemployment, public external and domestic debts, current account, fiscal balance) under alternative economic policies. The most insightful results are obtained under the scenario of a total factor productivity’s growth progressing at its average level of 2001–2010. Indeed, this could generate an average yearly gain in terms of GDP growth of 3.45 percentage points and a reduction of the average unemployment rate by 7 percentage points over the same time horizon.