Next Article in Journal
Foreign Direct Investment, Trade, and Economic Growth: An Empirical Analysis of Bangladesh
Previous Article in Journal
Impact of Economic Freedom on the Growth Rate: A Panel Data Analysis
Open AccessArticle

Nonlinear Monetary Policy Rules: An Essay in the Comparative Study on Egyptian and Tunisian Central Banks

Monnaie Modélisation Financement Développement (MOFID), University of Sousse, Sousse 4003, Tunisia
*
Author to whom correspondence should be addressed.
Academic Editor: Hans-Eggert Reimers
Economies 2016, 4(2), 6; https://doi.org/10.3390/economies4020006
Received: 23 November 2015 / Revised: 11 March 2016 / Accepted: 1 April 2016 / Published: 11 April 2016
The purpose of this paper is to evaluate the behavior of monetary authorities in Tunisia and Egypt, in response to changes in macroeconomic variables over time based on LSTR model. In this sense, we estimate Taylor-type equations for short-term interest rate in Tunisia and Egypt using quarterly data covering the period 1998.Q4–2013.Q2. We find strong evidence that the real decision-making process followed by these central banks varies from one central bank to another and that it exhibits nonlinear patterns that better capture special events and unexpected contingencies i.e., the terrorist attack in the US in September 2001, the global financial crisis in 2008, and the effect of political instability with the onset of the revolution. Additionally, the presence of asymmetries in the reaction function of the Tunisian and Egyptian Bank requires disconnection from their automatic pilot rules and use of judgement to make decisions. View Full-Text
Keywords: policy rule; central bank; exchange rate; Taylor rule; nonlinearity policy rule; central bank; exchange rate; Taylor rule; nonlinearity
Show Figures

Figure 1

MDPI and ACS Style

Baaziz, Y.; Labidi, M. Nonlinear Monetary Policy Rules: An Essay in the Comparative Study on Egyptian and Tunisian Central Banks. Economies 2016, 4, 6.

Show more citation formats Show less citations formats
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Article Access Map by Country/Region

1
Back to TopTop