IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Credibility of Inflation Targeting in Morocco and Tunisia

  • Adel Boughrara


    (University of Sousse, Tunisia)

  • Mongi Boughzala


    (University of Tunis ElManar)

  • Hassouna Moussa
Registered author(s):

    Can the Moroccan and the Tunisian financial systems withstand the consequences of adopting IT, and is IT the appropriate monetary policy for them? There are many crucial requirements for the success of IT including independence of the central bank, fiscal discipline, a flexible exchange rate, and a strong and transparent financial system. Most of these requirements are actually important for any sound monetary policy. Not all of them are readily fulfilled in Morocco and Tunisia, some may be achieved gradually, eventually over a transition period, but there are some crucial prerequisite conditions that are not fulfilled. Absence of fiscal and financial dominance is one of them, and there are many other features not consistent with IT. We argue that, in spite of the many reforms they implemented Morocco and Tunisia fiscal and financial systems are not yet adequate for IT; in particular, the NPL problem undermines their effectiveness. The success of IT also depends on some institutional conditions that seem currently hard to meet, namely the government ability and willingness to establish a credible system ensuring fiscal and monetary discipline and central bank independence. Under the current conditions the government and the monetary authority may be reluctant to move to IT. The paper also presents a fairly simple dynamic simulation model taking into account some basic and specific features of the Moroccan and Tunisian systems. The simulations show that IT under the fragile current system may destabilize the economy and the target is likely to be missed when important exogenous (eventually external) shocks occur.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    Paper provided by Economic Research Forum in its series Working Papers with number 448.

    in new window

    Length: 35 pages
    Date of creation: Oct 2008
    Date of revision: Oct 2008
    Publication status: Published by The Economic Research Forum (ERF)
    Handle: RePEc:erg:wpaper:448
    Contact details of provider: Postal: 7 Boulos Hanna Street, Dokki, Cairo
    Phone: 202-3370810
    Fax: 202-3616042
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:erg:wpaper:448. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Namees Nabeel)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.