ISSN: 2225-8329
Open access
The purpose of this paper is to detect the causes of inflation in Tunisia and to verify the existence of a causal relationship between central bank independence and inflation. Thus, we proved, using an ARDL model, that inflation in Tunisia is essentially explained by the variation of exchange rates, the turnover of the central bank governor, the credits granted to the private sector and the variation of interest rates which exerts a perverse effect. In this context, the analysis of inflation in Tunisia has allowed us to show that this phenomenon cannot be explained solely by monetary variables. Moreover, we have highlighted the existence of a positive impact of interest rates on inflation.
In addition, we have detected a new cause of inflation in Tunisia which is imports. This variable positively affects inflation in the long run. These results show that inflation in Tunisia is essentially a monetary and demand inflation in the short run. In the long run, inflation is also the result of structural factors that can be represented either by structural imbalances in the different markets, or by problems related to the quality of institutions or corruption.
Adayleh, R. M. (2018). Determinants of Inflation in jordanian economy: FMOLS approach. Journal of Internet Banking and Commerce,23(2), 1-19.
Aguir, A. (2013). L'indépendance réelle de la banque centrale et le biais inflationniste : une validation empirique. Archive ouverte pluridisciplinaire HAL, n° 0800059.
Aguir, A. (2014). Inflation targeting : an alternative to monetary policy. International journal of economics and finance, 6, (7), 182-194.
Aguir, A. (2018). Central bank credibility, independence, and monetary policy. Journal of Central Banking Theory and Practice, 7(3), 91-110.
Ahsen, A. (2011). Financial crisis and Central Bank Independence and Gouvernance (CBIG) and inflation in Asia Pacific, 8, (2), 313-335.
Aisen, A., & Veiga, F. J. (2006). Political Instability and Inflation Volatility. International Monetary Fund, Working Paper /06/212.
Alesina, A., Grilli, V., & Milesi-Ferrett, G. M. (1993). The political economy of capital controls. National Bureau of Economic Research. No. w4353.
Argy, V. (1970). Structural inflation in developing countries. Oxford Economic Papers, 22(1), 73-85.
Ayinde, O. E., Olatunji, G. B., Omotesho, O. A., & Kayode, A. (2010). Déterminants de l'inflation au Nigeria : une approche de co-intégration. Econpaper, No 94301.
Balke, N. S., & Emery, K. M. (1994). Understanding the Price Puzzle. Federal Reserve Bank of Dallas Economic Review, Fourth Quarter, 15-26.
Bayo, F. (2011). Determinants of Inflation in Nigeria: An Empirical Analysis. International Journal of Humanities and Social Science, 1 (18), 262-271.
Blanchard, O. (2004). Fiscal Dominance and inflation targeting: Lessons from Brazil. National Bureau of economic Research, Working Paper; n :10389.
Boulila, G. (2017). Coordination entre la politique monétaire et la politique budgétaire. Billet économique, Janvier , n°31.
Central Bank of Tunisia. (2000). "Annual Report".
Central Bank of Tunisia. (2017). "Annual Report".
Central Bank of Tunisia. (2018). "Annual Report".
Coutinho, L. (2012). Determinants of growth and inflation in Southern Mediterranean countries. Network Studies & Analyses, n° 436, Center for Social and Economic Research (CASE).
Cukierman, A. (1992). Central bank strategy, credibility, and independence: Theory and evidence. MIT Press Book, November.
Cukierman, A., & Webb, S. B. (1995). Political influence on the central bank: international evidence. The World Bank Economic Review, 9(3), 397-423.
Cukierman, A., Web, S. B., & Neyapti, B. (1992). Measuring the independence of central banks and its effect on policy outcomes. The World Bank Economic Review, 6(3), 353-398.
Cukierman, A. (94). Central Bank Independence and Monetary Control. Economic Journal,104(427), 1437-1448.
Daniel, T. R. (2006). Improvident Extension of Credit as an Extension of Unconscionability: Discover Bank v. Owens and a Debtor's Rights against Credit Card Companies. Cleveland State Law Review, 54 (3), 436-465.
Darrat, A. F. (1986). Money Inflation, and Causality in the North African Countries: An Empirical Investigation. Journal of Macroeconomics, 8(1), 87-103.
Deme, M., & Fayissa, B. (1995). Inflation, money, interest rate, exchange rate, and casuality: the case of Egypt, Morocco, and Tunisia. Applied Economics, 27(12), 1219-1224.
Desouza, M. (2001). Independent and Accountable Central Banks and the European Central Bank. European Integration online Papers, 5 (9), 1-23.
Dikey, D. A., & Fuller, W. A. (1979). Distribution of the Estimators for Autoregressive Time Series With a Unit Root. Journal of the American Statistical Association, 74(366), 427-431.
Edwards, S., Tabellini, G. (1991). Political instability, political weakness and inflation: An empirical analysis. NBER working papers, n ° 3721.
Favero, C. A., & Giavazzi, F. (2004). Iflation targeting and debt: lessons from Brazil. Nanional Bureau of economic Research, Working Paper n°10390.
Ftiti, Z., Aguir, A., & Smida, M. (2017). Time-inconsistency and expansionary business cycle theories: What does matter for the central bank independence–inflation relationship? . Economic Modelling, 67, 215-227.
Fouda, S. M. (1998). Indépendance de la banque centrale et inflation dans les pays africains subsahariens : existe-t-il une relation ? . Savings and Development, 22 (4), 455-470.
Fxtop company
Garriga, A. C. (2016). Central bank independence in the world: A new data set. International Interactions, 42(5), 849-868.
Garriga, A. C., & Rodriguez, C. M. (2020). More effective than we thought: Central bank independence and inflation in developing countries. Economic Modelling, 85 (C), 87-105.
Greenidge, K., & Da Costa, D. (2009). Determinants of Inflation in Selected Caribbean Countries. Business Finance and Economis in Emerging Economies, 4(2). 371-397.
Grilli, V., Masciandaro, D., & Tabillini, G. (1991). Political and monetary institutions and public financial policies. Economic Policy, 6 (13). 341–392.
Khmiri, R., & Ben Ali, M. S. (2012). Exchange Rate Pass-Through and Inflation Dynamics in Tunisia: A Markov-Switching Approach. Economics, the open Access, open –assessement E-Journal, Discussion Paper, No. 2012-39.
Kwiatkowski, D., Phillips, C. B., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root ? . Journal of Econometrics, 54(1-3), 159-178.
Loungami, P., & Sawgel, P. L. (2001). Sources of inflation in developing countries. International Monetary Fund, Working Paper 01/198.
Martin, G., Ringeval, C., & Vennin, V. (2015). Observing inflationary reheating. Physical Review Letters, 114 (8), 081303.
Milo, P. (2012). The impact of the budget deficit on the currency and inflation in the transition economies. Journal of Central Banking Theory and Practice, 1 (1), 25-57.
Montenegro, A. (2019). The ARDL Bound Cointegration Test: Tips for Application and Pretesting. SSRN 3425994.
Narayan, P. K. (2004). Reformulating Critical Values for the Bounds F- statistics Approach to Cointegration: An Application to the Tourism Demand Model for Fiji. MONASH University,2(4), 27-28.
Nkoro, E., & Uko, A. K. (2016). Autoregressive Distributed Lag (ARDL) cointegration technique: application and interpretation. Journal of Statistical and Econometric Methods, 5 (4), 78-79.
Olivera, H. G. (1964). On Structural Inflation and Latin-American Structuralism. Oxford Economic Papers, 16(3), 321–332.
Pahlavani, M., & Rahimi, M. (2009). Sources of inflation in Iran: An application of the ARDL approach. International Journal of Applied Econometrics and Quantitative Studies, 6(1), 61-76.
Pesaran, M. H., & Shin, Y. (1998). An Autoregressive Distributed-Lag Modelling Approach to Cointegration Analysis, Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, 31, 371-413.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16 (3), 289-326.
Phillips, P., & Perron, P. (1988). Testing for a Unit Root in Time Series Regression. Biometrika, 75 (2), 335-346.
Sims, C. (1992). Interpreting the macroeconomic time series facts: The effects of monetary policy. European Economic Review, 36 (5), 975-1000.
Tran, N. (2018). The long-run analysis of monetary policy transmission channels on inflation: a VECM approach. Journal of the Asia Pacific Economy, 23 (1), 17-30.
Vazques, F., & Jácome, L. (2008). « Is there any link between legal central bank independence and inflation? Evidence from Latin America and the Caribbean. European Journal of Political Economy, 24 (4), PP: 788-801.
Wacher, S. (1976). Latin American Inflation. Lexington, Mass.: Lexington Books, 1976.
Zonuzi, J. M., Pourvaladi, M. H., & Faraji, N. (2011). The relationship between budget deficit and inflation in Iran. Iranian Economic Review, 16 (1), 117-133.
In-Text Citation: (Malek et al., 2021)
To Cite this Article: Malek, E. W., Wahiba, N. F., & Firas, Z. (2021). Inflation and Real Measure of Central Bank Independence in Tunisia. International Journal of Academic Research in Accounting Finance and Management Sciences, 11(3), 410–432.
Copyright: © 2021 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode