Non-Linear Modelling of Money Demand in Tunisia: Evidence from the STAR Model

Nidhal Mgadmi (), Helmi Hamdi and Houssem Rachdi
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Nidhal Mgadmi: Faculty of Law, Economics and Management of Jendouba, University of Jendouba, Tunisia
Houssem Rachdi: HEC Carthage Business School, University of Carthage

Economics Bulletin, 2016, vol. 36, issue 4, 1975-1985

Abstract: Tunisia went through a turbulent 1980s and 1990s, characterized by the introduction of the IMF's Structural Adjustment Programs (SAPs) in 1986 and the modernization of the Stock Market Exchange. These changes and reforms in the monetary policy seek to control the supply of money and contribute to the achievement of price and financial stability. Over the period 1973–2013, this paper presents an empirical investigation into the stability of money demand using the Smooth Transition Autoregressive models (STAR) which is characterized by switching regimes through continuous transition functions. The instability of the money demand is explained by the fragility of the Tunisian economy to world shocks and by the implementation of the IMF's Structural Adjustment Programs.

Keywords: Stability; Money; Tunisia; STAR (search for similar items in EconPapers)
JEL-codes: C5 F4 (search for similar items in EconPapers)
Date: 2016-11-09
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Citations: View citations in EconPapers (1)

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