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The Relationship Between Public Debt, Economic Growth, and Monetary Policy: Empirical Evidence from Tunisia

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  • Inès ABDELKAFI

    (University of Sfax)

Abstract

This paper aims to examine the relationship between public debt, economic growth, and monetary policy in Tunisia. We study the contribution of fiscal shocks through public debt on monetary policy and on macroeconomic dynamics using the SVECM model and Granger causality over the period 2002–2013. Econometric analysis results indicate that public debt, monetary policy, and economic activity are interdependent. The causality approach showed a bidirectional causality relationship between public debt, economic growth and monetary policy. This study shows that monetary and fiscal policies affect real activity, inflation, and exchange rate in Tunisia. The conflicts between the objectives of fiscal and monetary authorities explain the high rate of inflation and the decline in activity.

Suggested Citation

  • Inès ABDELKAFI, 2018. "The Relationship Between Public Debt, Economic Growth, and Monetary Policy: Empirical Evidence from Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1154-1167, December.
    • Handle: RePEc:spr:jknowl:v:9:y:2018:i:4:d:10.1007_s13132-016-0404-6
    DOI: 10.1007/s13132-016-0404-6
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    2. Bakhtiar Javaheri & Fateh habibi & Ramin Amani, 2022. "Economic policy uncertainty and the US stock market trading: non-ARDL evidence," Future Business Journal, Springer, vol. 8(1), pages 1-10, December.
    3. Wissem Khanfir, 2019. "Threshold Effect of Public Debt on Economic Growth: An Empirical Investigation for Selected North African Countries," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 429-436, September.
    4. Mariana Hatmanu & Cristina Cautisanu & Mihaela Ifrim, 2020. "The Impact of Interest Rate, Exchange Rate and European Business Climate on Economic Growth in Romania: An ARDL Approach with Structural Breaks," Sustainability, MDPI, vol. 12(7), pages 1-23, April.

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