Journal of World Economic Research

| Peer-Reviewed |

Money Demand Instability and Money Supply in Tunisia during Transition Period

Received: 14 December 2014    Accepted: 16 December 2014    Published: 24 January 2015
Views:       Downloads:

Share This Article

Abstract

The objective of this paper is to present an empirical analysis of Tunisian money demand, money supply and monetary policy before and after economic transitions. This work explores the instability in estimated money demand functions. We evaluate the role of financial innovations in stabilizing the demand money function over two periods. Results suggest that the monetary aggregate has become inadequate to justify the controllability of money supply by the Tunisian Central Bank during the period of 1987 to 2013. The empirical evidence presented in the paper, provides that Tunisia to be held account of the effect of financial liberalization for adopting the inflation targeting like alternative monetary strategy.

DOI 10.11648/j.jwer.s.2014030601.13
Published in Journal of World Economic Research (Volume 3, Issue 6-1, December 2014)

This article belongs to the Special Issue Issues and Challenges of the Financial and Economic Crisis Throughout the World

Page(s) 15-21
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Monetary Aggregates, Monetary Policy, Time Series, Tunisia

References
[1] Blundel-Wignall, A., Browne, F. and Manasse, P. (1990), La Politique Monétaire dans le Contexte de la Libéralisation Financière. Revue Economique de l'OCDE, Vol.15, N°4, pp.163-199.
[2] Borio, C. (2001), Comparing Monetary Policy Operating Procedures across the United States, Japan and the Euro Area. Bank for International Settlements, Monetary and Economic Department, Bis Paper 9.
[3] Boughrara, A. (2007), Can Tunisia Move to Inflation Targeting. The Developing Economies, XLV (1), pp. 27-62.
[4] Brillembour, A. and Khan, M. (1979), The Relationship between Money, Income and Prices: Has Money Mattered Historically?. Journal of Money, Credit and Banking, Vol.11, N°3, pp. 358-365.
[5] Brunner, K. and Meltzer, H. A. (1967), Some Further Investigations on Demand and Supply Function for Money. The Journal of Finance, Vol. 19, pp. 240-283.
[6] Clarida, R., Gali, J. and Gertler, M. (2000), Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory. Quarterly Journal of Economics, Mit Press, 115, pp. 147-180.
[7] Darrat, A. (1986), Money, Inflation and Causality in the North African Countries: An Empirical Investigation. Journal of Macroeconomic, Vol.8, N°1, pp. 87-103.
[8] Drama, B. H. G. and Yao, S. (2010) The demand for money in Cote d’Ivoire: evidence from the co-integration test, International Journal of Economics and Finance 3(1).
[9] Ericsson, N. R. and Irons, J. S. (2001), Output and Inflation in the Long Run. Journal of Applied Econometrics, Vol. 16, N°3, pp. 241- 253.
[10] Estrella, A. and Mishkin, F. (1997), Is There a Role for Monetary Aggregates in the Conduct of Monetary Policy?. Journal of Monetary Economics, Vol.40, N°2, pp. 279-304.
[11] Friedman, M. (1975), Targets, Instruments and Indicators of Monetary Policy. Journal of Monetary Economics, Vol. 1, pp. 443-473.
[12] Friedman, M. and Schwartz, A. J. (1963), A Monetary History of the United Stated 1867–1960. Princeton University Press 1963.
[13] Friedman, M. (1983), Monetary Policy with a Credit Aggregate Target, NBER Working Paper 0980.
[14] Friedman, M. and Kuttner, K. N. (1993), Another Look at the Evidence on Money-Income Causality. Journal of Econometrics, Vol.57, pp. 189-203.
[15] Friedman, M. (1995), Does Monetary Policy Affect Real Economic Activity: Why do We Still Ask This Question?. NBER Working Paper 5212.
[16] Friedman, M. and Kuttner, K. N. (1996), Price Target for US Monetary Policy? Lessons from the Experience with Money Growth Targets. Brookings Paper of Economic Activity, Vol.1, pp. 77-146.
[17] Khan, H. P. and Hussein, K. (1998), The Endogenous of Money Evidence from the G7. Scottish
[18] Journal of Political Economy, Vol.45, N°3, pp. 329-340.
[19] Manai Daboussi, O. (2014). Economic performance and inflation targeting in developing economies. Journal of World Economic Research. 3(1), pp1-7.
[20] Manai, O. Chebbi, A. Madouri, A. (2013)). Inflation Targeting Policy: Pre-requisites and Opportunities for Tunisia. Science Journal of Economics. pp 1-5.
[21] Moore, B. (1988), The Endogenous Money Supply. Journal of Post Keynesian Economics, Vol.10, N°3, pp. 372-385.
[22] Nayan,N., Norsiah, K., Abdullah,M., (2013) Post Keynesian Endogeneity of Money Supply: Panel Evidence. Procedia Economics and Finance. Vol 7, pp 48–54.
[23] Owoye, O. and Onafowora, O. A. (2007), M2 targeting, money demand, and real GDP growth in Nigeria: Do rules apply? Journal of Business and Public Affairs, 1, pp 1-20.
[24] Rao, B. B. and Kumar, S. (2009), A panel data approach to the demand for money and the effects of financial reforms in the Asian countries. Economic Modeling 26, pp 1012-1017.
[25] Sarel, M. (1996), Non Linear Effects of Inflation on Economic Growth .IMF Staff Papers, Vol.43, N°1, pp. 199-215.
[26] Werner, R.A. (2014), Enhanced Debt Management: Solving the Euro-zone crisis by linking debt management with fiscal and monetary policy. Journal of International Money and Finance. Vol 49, Part B, pp 443–469.
Author Information
  • MASE- ESSAI and MACMA- TUNIS, Higher Institute of Management of Tunis, University of Tunis, Tunisia

  • Applied Quantitative Analysis Unit (UAQUAP) -Tunisia ISG and GATE (UMR 5824CNRS), Higher Institute of Management of Tunis, University of Tunis, Tunisia

Cite This Article
  • APA Style

    Olfa Manai Daboussi, Amira Majoul. (2015). Money Demand Instability and Money Supply in Tunisia during Transition Period. Journal of World Economic Research, 3(6-1), 15-21. https://doi.org/10.11648/j.jwer.s.2014030601.13

    Copy | Download

    ACS Style

    Olfa Manai Daboussi; Amira Majoul. Money Demand Instability and Money Supply in Tunisia during Transition Period. J. World Econ. Res. 2015, 3(6-1), 15-21. doi: 10.11648/j.jwer.s.2014030601.13

    Copy | Download

    AMA Style

    Olfa Manai Daboussi, Amira Majoul. Money Demand Instability and Money Supply in Tunisia during Transition Period. J World Econ Res. 2015;3(6-1):15-21. doi: 10.11648/j.jwer.s.2014030601.13

    Copy | Download

  • @article{10.11648/j.jwer.s.2014030601.13,
      author = {Olfa Manai Daboussi and Amira Majoul},
      title = {Money Demand Instability and Money Supply in Tunisia during Transition Period},
      journal = {Journal of World Economic Research},
      volume = {3},
      number = {6-1},
      pages = {15-21},
      doi = {10.11648/j.jwer.s.2014030601.13},
      url = {https://doi.org/10.11648/j.jwer.s.2014030601.13},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.jwer.s.2014030601.13},
      abstract = {The objective of this paper is to present an empirical analysis of Tunisian money demand, money supply and monetary policy before and after economic transitions. This work explores the instability in estimated money demand functions. We evaluate the role of financial innovations in stabilizing the demand money function over two periods. Results suggest that the monetary aggregate has become inadequate to justify the controllability of money supply by the Tunisian Central Bank during the period of 1987 to 2013. The empirical evidence presented in the paper, provides that Tunisia to be held account of the effect of financial liberalization for adopting the inflation targeting like alternative monetary strategy.},
     year = {2015}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Money Demand Instability and Money Supply in Tunisia during Transition Period
    AU  - Olfa Manai Daboussi
    AU  - Amira Majoul
    Y1  - 2015/01/24
    PY  - 2015
    N1  - https://doi.org/10.11648/j.jwer.s.2014030601.13
    DO  - 10.11648/j.jwer.s.2014030601.13
    T2  - Journal of World Economic Research
    JF  - Journal of World Economic Research
    JO  - Journal of World Economic Research
    SP  - 15
    EP  - 21
    PB  - Science Publishing Group
    SN  - 2328-7748
    UR  - https://doi.org/10.11648/j.jwer.s.2014030601.13
    AB  - The objective of this paper is to present an empirical analysis of Tunisian money demand, money supply and monetary policy before and after economic transitions. This work explores the instability in estimated money demand functions. We evaluate the role of financial innovations in stabilizing the demand money function over two periods. Results suggest that the monetary aggregate has become inadequate to justify the controllability of money supply by the Tunisian Central Bank during the period of 1987 to 2013. The empirical evidence presented in the paper, provides that Tunisia to be held account of the effect of financial liberalization for adopting the inflation targeting like alternative monetary strategy.
    VL  - 3
    IS  - 6-1
    ER  - 

    Copy | Download

  • Sections