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The NAIRU in Tunisia: Determinants, measurement and policy implications

Author

Listed:
  • Hajer EL OUARDANI

    (Higher School of Economic and Commercial Sciences of Tunis, University of Tunis, Tunisia)

  • Mouez SOUSSI

    (Higher Commercial Studies Institute of Carthage, University of Carthage, Tunisia)

Abstract

This paper develops a model to determine the Non-Accelerating Inflation Rate of Unem-ployment (NAIRU) in Tunisia, i,e, the rate of unemployment at which inflation stabilizes in the absence of any wage-price adjustments. Using data for the period 1970-2016, the NAIRU in Tunisia appears to exhibit two characteristics: (1) it not only stands at a relative-ly high level but is above an actual unemployment rate that has been persistently high, and (2) it is sensitive to changes in average wages, the effective unemployment rate and the terms of trade, but insensitive to changes in labor productivity. Addressing the prob-lem of relatively high unemployment in Tunisia, would therefore call for a major refocus of the country’s economic policies towards measures that raise the level of factor productivity in the various economic sectors along with macroeconomic policies aimed at controlling inflationary pressures.

Suggested Citation

  • Hajer EL OUARDANI & Mouez SOUSSI, 2020. "The NAIRU in Tunisia: Determinants, measurement and policy implications," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 52, pages 127-146.
    • Handle: RePEc:tou:journl:v:52:y:2020:p:127-146
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    References listed on IDEAS

    as
    1. Laurence Ball & N. Gregory Mankiw, 2002. "The NAIRU in Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 115-136, Fall.
    2. Nickell, Stephen, 1998. "Unemployment: Questions and Some Answers," Economic Journal, Royal Economic Society, vol. 108(448), pages 802-816, May.
    3. Nickell, Stephen J, 1990. "Unemployment: A Survey," Economic Journal, Royal Economic Society, vol. 100(401), pages 391-439, June.
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    Cited by:

    1. Boukraine, Wissem & Guerchi Mehri, Hella, 2022. "Should Tunisian Optimal Monetary Policy React to Wage Inflation? Evidence From A DSGE Model with Labor Market Frictions," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(1), pages 29-50.

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    More about this item

    Keywords

    NAIRU in Tunisia ; Unemployment determinants ; Labor productivity ; Inflation ; Macroeco-nomic policies;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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