The inflation targeting policy in Tunisia? Between perception and reality

Kadria, Mohamed and Ben Aissa, Mohamed Safouane (2014): The inflation targeting policy in Tunisia? Between perception and reality.

Abstract

In this paper, we tried to examine and provide a clear answer on the possibility of the Central Bank of Tunisia to adopt the inflation targeting (IT) monetary policy. But the transition to the new optimum monetary framework remains a challenge in itself and requires the filling of certain pre-conditions. To do this, we first started by clarifying the conduct of monetary policy in Tunisia and the institutional and structural pre-requisites progress to make in adoption view of this new strategy, which allows more inflation mastering in a context of crisis and post-revolution. Regarding the transmission mechanisms, we conducted an empirical study of dynamic structural VAR models to conclude whether there is a stable and predictable relationship between monetary policy instruments and inflation, which is considered as a strong technical condition in favor of IT.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation targeting, transmission mechanisms, structural VAR, Tunisia.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit

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