IDEAS home Printed from https://ideas.repec.org/a/wly/ijfiec/v27y2022i4p4684-4704.html
   My bibliography  Save this article

The Tunisian exchange rate regime: Is it really floating?

Author

Listed:
  • Mohamed Bouabidi

Abstract

While the Tunisian authority claims to adopt a floating exchange regime, the International Monetary Fund (IMF) classifies it as a rather crawl‐like regime. This paper aims at studying the Tunisian exchange rate regime over the post‐revolution period. It uses daily data from 2010 to 2019. The empirical results show that the Tunisian de facto regime is broadly consistent with the IMF classification. Nevertheless, the IMF stated that in 2018 the EUR is the only anchor, but this study shows that from 2017 the implicit weight of the USD becomes higher than the EUR. Most of the time, there is a discrepancy between the regime claimed by the Tunisian authority and the de facto regime detected by the model. Annual regressions, the Chow, and the Bai‐Perron breakpoint tests show that the Tunisian de facto regime is not stable.

Suggested Citation

  • Mohamed Bouabidi, 2022. "The Tunisian exchange rate regime: Is it really floating?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4684-4704, October.
    • Handle: RePEc:wly:ijfiec:v:27:y:2022:i:4:p:4684-4704
    DOI: 10.1002/ijfe.2394
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/ijfe.2394
    Download Restriction: no
    File URL: https://libkey.io/10.1002/ijfe.2394?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Barry Eichengreen & Ricardo Hausmann & Ugo Panizza, 2007. "Currency Mismatches, Debt Intolerance, and the Original Sin: Why They Are Not the Same and Why It Matters," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 121-170, National Bureau of Economic Research, Inc.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 1-48.
    3. Baxter, Marianne & Stockman, Alan C., 1989. "Business cycles and the exchange-rate regime : Some international evidence," Journal of Monetary Economics, Elsevier, vol. 23(3), pages 377-400, May.
    4. Hausmann, Ricardo & Panizza, Ugo & Stein, Ernesto, 2001. "Why do countries float the way they float?," Journal of Development Economics, Elsevier, vol. 66(2), pages 387-414, December.
    5. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 379-408.
    6. Michael Bleaney & Mo Tian, 2017. "Measuring exchange rate flexibility by regression methods," Oxford Economic Papers, Oxford University Press, vol. 69(1), pages 301-319.
    7. Jeffrey Frankel & Daniel Xie, 2010. "Estimation of De Facto Flexibility Parameter and Basket Weights in Evolving Exchange Rate Regimes," American Economic Review, American Economic Association, vol. 100(2), pages 568-572, May.
    8. Kato, Isamu & Uctum, Merih, 2008. "Choice of exchange rate regime and currency zones," International Review of Economics & Finance, Elsevier, vol. 17(3), pages 436-456.
    9. Frankel, Jeffrey A. & Fajnzylber, Eduardo & Schmukler, Sergio L. & Serven, Luis, 2001. "Verifying exchange rate regimes," Journal of Development Economics, Elsevier, vol. 66(2), pages 351-386, December.
    10. Michael Bleaney & F. Gulcin Ozkan, 2011. "The structure of public debt and the choice of exchange rate regime," Canadian Journal of Economics, Canadian Economics Association, vol. 44(1), pages 325-339, February.
    11. Harvey, David I. & Leybourne, Stephen J. & Taylor, A.M. Robert, 2006. "Modified tests for a change in persistence," Journal of Econometrics, Elsevier, vol. 134(2), pages 441-469, October.
    12. Ahmad, A.H. & Harvey, David I. & Pentecost, Eric J., 2011. "Exchange rate regime verification: An alternative method of testing for regime changes," Economics Letters, Elsevier, vol. 113(1), pages 96-98, October.
    13. Jeffrey A. Frankel, 2009. "New Estimation Of China'S Exchange Rate Regime," Pacific Economic Review, Wiley Blackwell, vol. 14(3), pages 346-360, August.
    14. Atish R. Ghosh & Anne-Marie Gulde & Holger C. Wolf, 2003. "Exchange Rate Regimes: Choices and Consequences," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262072408, December.
    15. Alberto Alesina & Alexander F. Wagner, 2006. "Choosing (and Reneging on) Exchange Rate Regimes," Journal of the European Economic Association, MIT Press, vol. 4(4), pages 770-799, June.
    16. Kimakova, Alena, 2008. "The political economy of exchange rate regime determination: Theory and evidence," Economic Systems, Elsevier, vol. 32(4), pages 354-371, December.
    17. International Monetary Fund, 2019. "Tunisia: Fifth Review Under the Extended Fund Facility, and Requests for Waivers of Nonobservance and Modification of Performance Criteria and for Rephasing of Access," IMF Staff Country Reports 2019/223, International Monetary Fund.
    18. Jeffrey Frankel & Shang-Jin Wei, 2008. "Estimation of De Facto Exchange Rate Regimes: Synthesis of the Techniques for Inferring Flexibility and Basket Weights," IMF Staff Papers, Palgrave Macmillan, vol. 55(3), pages 384-416, July.
    19. Husain, Aasim M. & Mody, Ashoka & Rogoff, Kenneth S., 2005. "Exchange rate regime durability and performance in developing versus advanced economies," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 35-64, January.
    20. Jushan Bai & Pierre Perron, 2003. "Critical values for multiple structural change tests," Econometrics Journal, Royal Economic Society, vol. 6(1), pages 72-78, June.
    21. Catherine Schenk & John Singleton, 2011. "Basket Pegs And Exchange Rate Regime Change: Australia And New Zealand In The Mid‐Seventies," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 51(2), pages 120-149, July.
    22. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
    23. Jesse Russell, 2011. "Hidden patterns in exchange rate regime choice," Empirical Economics, Springer, vol. 40(2), pages 425-449, April.
    24. Guillermo A. Calvo & Frederic S. Mishkin, 2003. "The Mirage of Exchange Rate Regimes for Emerging Market Countries," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 99-118, Fall.
    25. Stanley Fischer, 2001. "Exchange Rate Regimes: Is the Bipolar View Correct?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 3-24, Spring.
    26. Jyh-Dean Hwang, 2014. "Verifying China's exchange rate regime: it is a discretionary crawling peg to the US dollar!," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 7(3), pages 250-270.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frankel, Jeffrey, 2010. "Monetary Policy in Emerging Markets," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 25, pages 1439-1520, Elsevier.
    2. Levy Yeyati, Eduardo & Sturzenegger, Federico & Reggio, Iliana, 2010. "On the endogeneity of exchange rate regimes," European Economic Review, Elsevier, vol. 54(5), pages 659-677, July.
    3. Jeffrey Frankel, 2021. "Systematic Managed Floating," World Scientific Book Chapters, in: Steven J Davis & Edward S Robinson & Bernard Yeung (ed.), THE ASIAN MONETARY POLICY FORUM Insights for Central Banking, chapter 5, pages 160-221, World Scientific Publishing Co. Pte. Ltd..
    4. Bersch, Julia & Klüh, Ulrich H., 2007. "When countries do not do what they say: Systematic discrepancies between exchange rate regime announcements and de facto policies," Discussion Papers in Economics 2072, University of Munich, Department of Economics.
    5. Piersanti, Giovanni, 2012. "The Macroeconomic Theory of Exchange Rate Crises," OUP Catalogue, Oxford University Press, number 9780199653126.
    6. Alexis Cruz-Rodriguez, 2013. "Choosing and Assessing Exchange Rate Regimes: a Survey of the Literature," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 28(2), pages 37-61, October.
    7. Flávio Vilela Vieira & Márcio Holland, 2004. "Exchange Rate Dynamics In Brazil," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32nd Brazilian Economics Meeting] 066, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    8. Tamgac, Unay, 2013. "Duration of fixed exchange rate regimes in emerging economies," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 439-467.
    9. Mohammad Karimi & Marcel-Cristian Voia, 2014. "Currency Crises, Exchange Rate Regimes and Capital Account Liberalization: A Duration Analysis Approach," Dynamic Modeling and Econometrics in Economics and Finance, in: Frauke Schleer-van Gellecom (ed.), Advances in Non-linear Economic Modeling, edition 127, pages 233-262, Springer.
    10. Marc Pourroy, 2013. "Inflation-Targeting and Foreign Exchange Interventions in Emerging Economies," Post-Print halshs-00881359, HAL.
    11. Kimakova, Alena, 2008. "The political economy of exchange rate regime determination: Theory and evidence," Economic Systems, Elsevier, vol. 32(4), pages 354-371, December.
    12. Philipp Harms & Marco Kretschmann, 2009. "Words, Deeds And Outcomes: A Survey On The Growth Effects Of Exchange Rate Regimes," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 139-164, February.
    13. Abouelkhaira, Anass & Gahaz, Taha & Y. Tamsamani, Yasser, 2018. "Choix du régime de change et croissance économique : Une analyse empirique sur des données de panel africaines [Exchange Rate Regime Choice and Economic Growth: An Empirical Analysis on African Pan," MPRA Paper 84613, University Library of Munich, Germany.
    14. Giancarlo Marini & Giovanni Piersanti, 2012. "Models of Speculative Attacks and Crashes in International Capital Markets," CEIS Research Paper 245, Tor Vergata University, CEIS, revised 24 Jul 2012.
    15. Mr. Aasim M. Husain & Mr. Ashoka Mody & Nienke Oomes & Mr. Robin Brooks & Mr. Kenneth Rogoff, 2003. "Evolution and Performance of Exchange Rate Regimes," IMF Working Papers 2003/243, International Monetary Fund.
    16. Abouelkhair, Anass & Gahaz, Taha & Y. Tamsamani, Yasser, 2018. "Choix du régime de change et croissance économique : Une analyse empirique sur des données de panel africaines [Exchange Rate Regime Choice and Economic Growth: An Empirical Analysis on African Pan," MPRA Paper 84700, University Library of Munich, Germany.
    17. Gunther Schnabl, 2004. "De jure versus de facto Exchange Rate Stabilization in Central and Eastern Europe," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 59(02), pages 171-190, June.
    18. Mohamed Bouabidi, 2023. "The surge in Tunisia foreign debt: causes and possible ways out," SN Business & Economics, Springer, vol. 3(3), pages 1-23, March.
    19. Mahvash S Qureshi & Mr. Atish R. Ghosh & Mr. Charalambos G Tsangarides, 2011. "Words vs. Deeds: What Really Matters?," IMF Working Papers 2011/112, International Monetary Fund.
    20. Esaka, Taro, 2010. "Exchange rate regimes, capital controls, and currency crises: Does the bipolar view hold?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 20(1), pages 91-108, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ijfiec:v:27:y:2022:i:4:p:4684-4704. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.interscience.wiley.com/jpages/1076-9307/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.