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Capital Mobility and the Optimal Monetary Policy Rule: A Tunisian Case Study

In: Inflation Targeting in MENA Countries

Author

Listed:
  • Mahmoud Sami Nabi
  • Ndiamé Diop

Abstract

Capital account liberalisation is likely to boost growth through a range of direct and indirect channels: 1) an increase in foreign direct investment (FDI) flows, which may generate learning-by-doing effects, technology transfers and positive effects on domestic investment (see Edison et al., 2004, for an analysis of the relationship between FDI and growth); 2) a greater scope for local firms’ internationalisation; 3) the development of the stock market (Quinn and Toyoda, 2006); 4) the entry of foreign banks, which may lead to greater competition in the domestic financial sector. Nearly all studies based on macro or sector-level data find that financial development, measured by the size of financial intermediation or of external finance relative to GDP, has a significant positive impact on growth, either directly, by raising factor productivity, or indirectly, by stimulating the accumulation of physical and knowledge capital (Pelgrin et al., 2002; Rousseau and Vuthipadadorn, 2005).

Suggested Citation

  • Mahmoud Sami Nabi & Ndiamé Diop, 2011. "Capital Mobility and the Optimal Monetary Policy Rule: A Tunisian Case Study," Palgrave Macmillan Books, in: Mongi Boughzala & David Cobham (ed.), Inflation Targeting in MENA Countries, chapter 4, pages 72-99, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-31656-0_4
    DOI: 10.1057/9780230316560_4
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    Cited by:

    1. Nabi, Mahmoud Sami, 2021. "لتشع تونس من جديد [Making the Tunisian Resurgence]," MPRA Paper 107225, University Library of Munich, Germany.

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