Tie among Domestic Investment, Total Consumption and External Debt: Lessons from Tunisia

Bakari, Sayef and Tiba, Sofien (2019): Tie among Domestic Investment, Total Consumption and External Debt: Lessons from Tunisia.

Abstract

This paper aimed at examining the tie between domestic investment, total consumption, and external debt in the case of Tunisia over the period 1970-2017. By applying the VECM, in the long-run, our findings recorded the fact that that external debt and domestic investment have a negative effect on total consumption. However, we found a significant negative impact of the total consumption and external debt on domestic investment. In the short run, we recorded that only total consumption and external debt cause domestic investment. Due to the importance of our insights, several lessons for Tunisia in terms of commitment towards the aims of the 14 January revolution and reforms should be undertaken.

• Item Type: MPRA Paper
• Language: English
• Keywords: Domestic investment, Total consumption, External debt, VECM, Tunisia.
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

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