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Tunisia: Sources of Real Exchange Rate Fluctuations

Author

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  • Sfia Mohamed Daly

Abstract

Using structural VARs identified with long-run restrictions, this paper evaluates the importance of nominal shocks and real disturbances on the Tunisian Dinar during the nineties. The estimated macroeconomic behaviour in response to the shocks identified with a Clarida and Gali???type structural VAR for Tunisia is generally in line with theoretical priors stemming from the Mundell-Fleming model. The structural decomposition shows that relative real demand and supply shocks account for most of the variations in real exchange rate changes during the estimation period and indicates that real disturbances explain about 80% of the variance of the forecast error of the real exchange rate.

Suggested Citation

  • Sfia Mohamed Daly, 2006. "Tunisia: Sources of Real Exchange Rate Fluctuations," William Davidson Institute Working Papers Series wp880, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2007-880
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/57260/1/wp880.pdf
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    Citations

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    Cited by:

    1. Brixiova Zuzana & Egert Balazs & Essid Thouraya Hadj Amor, 2014. "The Real Exchange Rate and External Competitiveness in Egypt, Morocco and Tunisia," Review of Middle East Economics and Finance, De Gruyter, vol. 10(1), pages 25-51, April.
    2. Zuzana Brixiova & Balázs Égert & Thouraya Hadj Amor Essid, 2013. "Working Paper 187 - The Real Exchange Rate and External Competitiveness in Egypt, Morocco and Tunisia," Working Paper Series 991, African Development Bank.

    More about this item

    Keywords

    Tunisia; real exchange rate; structural VAR;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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