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Optimal Monetary Policy Under Inflation Targeting in Tunisia: New Keynesian Model

Dorra Turki & Foued Badr Gabsi

Economic Notes2025https://doi.org/10.1111/ecno.70005article
AJG 1ABDC B
Weight
0.37

Abstract

This article analyzes monetary policy under inflation targeting in a developing economy using a hybrid new Keynesian model to determine the optimal policy rule. Firstly, we estimate the model's parameters using a Bayesian approach with data from the Tunisian economy from 2000 Q1 to 2020 Q4. Then, we solve an optimization problem to evaluate different types of monetary policy rules within the framework of two inflation‐targeting regimes. The results show that a forward‐looking rule with interest rate smoothing minimizes welfare loss most effectively within a strict inflation‐targeting framework.

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https://doi.org/https://doi.org/10.1111/ecno.70005

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@article{dorra2025,
  title        = {{Optimal Monetary Policy Under Inflation Targeting in Tunisia: New Keynesian Model}},
  author       = {Dorra Turki & Foued Badr Gabsi},
  journal      = {Economic Notes},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/ecno.70005},
}

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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