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Taylor Rule and Monetary Policy in Tunisia

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  • Imen Mohamed Sghaier

    (University of Sfax, Faculty of Economics and Management of Sfax)

Abstract

This paper estimates the forward-looking monetary policy reaction function of the Central Bank of Tunisia (CBT) using quarterly data from 1993:Q2 to 2011:Q4. Policies which the CBT applied are analyzed according to the Taylor rule. The empirical results indicate that the CBT followed the Taylor rule in its interest setting behaviour. In forward-looking models, the response coefficient of expected inflation is greater than the output gap, which is consistent with the fact that inflation is the primary objective of monetary policy. The results of forwardlooking models reflect the policies conducted in Tunisia.

Suggested Citation

  • Imen Mohamed Sghaier, 2012. "Taylor Rule and Monetary Policy in Tunisia," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(45), pages 143-166, December.
    • Handle: RePEc:rej:journl:v:15:y:2012:i:46:p:143-166
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    References listed on IDEAS

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    More about this item

    Keywords

    Taylor rule; Monetary policy; Reaction function; GMM.;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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