Journal of Finance and Economics

Journal of Finance and Economics

ISSN: 2291-4951 (Print)    ISSN: 2291-496X (Online)

Volume 1 (2013), No. 4, Pages 30-41

DOI: 10.12735/jfe.v1i4p30

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Taylor Rule and Monetary Policy in Tunisia

Imen Mohamed Sghaier1 

1University of Sfax, Faculty of Economics and Management of Sfax, Tunisia

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This paper estimates the forward-looking monetary policy reaction function of the Central Bank of Tunisia (CBT) using quarterly data from 1993:Q2 to 2011:Q4. Policies which the CBT applied are analyzed according to the Taylor rule. The empirical results indicate that the CBT followed the Taylor rule in its interest setting behaviour. In forward-looking models, the response coefficient of expected inflation is greater than the output gap, which is consistent with the fact that inflation is the primary objective of monetary policy. The results of forward-looking models reflect the policies conducted in Tunisia.

JEL Classifications: E52, E43, E58

Keywords: taylor rule, monetary policy, reaction function, GMM

To Cite this Article: Sghaier, I. M. (2013). Taylor rule and monetary policy in Tunisia. Journal of Finance and Economics, 1(4), 30-41.

Copyright © Imen Mohamed Sghaier

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This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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Taylor Rule and Monetary Policy in Tunisia