{
  "title": "Broad Money Demand and Monetary Policy in Tunisia",
  "publication": "IMF Working Papers, March 1, 1997",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/broad-money-demand-and-monetary-policy-in-tunisia-2128",
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  "summary": "The development of empirical foundations to the conduct of monetary policy in Tunisia is the central concern of this paper. Finding stable money demand functions, it broadly corroborates the choice of monetary aggregates as intermediate targets of monetary policy by the Tunisian Central Bank.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Central concern: the development of empirical foundations to the conduct of monetary policy in Tunisia.\n- Main conclusions:\n  - Stable money demand functions are found.\n  - The findings broadly corroborate the choice of monetary aggregates as intermediate targets of monetary policy by the Tunisian Central Bank.\n  - The paper finds a lower income elasticity than the one currently applied by the Central Bank and proposes a different methodology for defining monetary growth targets.\n  - Both interest rates and reserve money are feasible operating targets.\n  - Suggestion that the Central Bank orients its monetary policy more towards transparent operating targets."
    },
    {
      "heading": "Key findings and analysis",
      "content": "- Existence of stable money demand functions supports use of monetary aggregates (e.g., monetary aggregate M2) as intermediate targets.\n- Estimated income elasticity of money demand is lower than the elasticity currently applied by the Tunisian Central Bank (paper does not state the numerical elasticities on the landing page).\n- Methodological proposal: adopt a different methodology for defining monetary growth targets consistent with the lower estimated income elasticity.\n- Operational targets: both interest rates (T-bill rate) and reserve money are identified as feasible operating targets for the Central Bank."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Reassess the income elasticity parameter used to convert nominal GDP projections into monetary growth targets, reflecting the paper’s lower estimated income elasticity.\n- Consider defining monetary growth targets using the alternative methodology proposed in the paper (details in full paper).\n- Orient monetary policy implementation toward more transparent operating targets, using either interest rate instruments or reserve money."
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subjects: Banking, Demand for money, Financial institutions, Monetary aggregates, Monetary base, Money, National accounts, Personal income, Treasury bills and bonds\n- Keywords: Asia and Pacific, Demand for money, inflation rate, interest rate target, Maghreb, monetary aggregate M2, Monetary aggregates, Monetary base, money demand, money demand function, Personal income, T-bill rate, targeted monetary aggregate, treasury bill, Treasury bills and bonds, WP\n\nBroad Money Demand and Monetary Policy in Tunisia, IMF Working Papers 1997/022. DOI: https://doi.org/10.5089/9781451921250.001\n\n---\n\n Content in this bundle\n\n- Broad Money Demand and Monetary Policy in Tunisia - WP/97/22\n  - Broad Money Demand and Monetary Policy in Tunisia - WP/97/22 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Broad Money Demand and Monetary Policy in Tunisia - WP/97/22 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/broad-money-demand-and-monetary-policy-in-tunisia-2128"
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    "Authors: Volker Treichel",
    "Published: March 1, 1997",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451921250.001",
    "Central concern: the development of empirical foundations to the conduct of monetary policy in Tunisia.",
    "Main conclusions:",
    "Existence of stable money demand functions supports use of monetary aggregates (e.g., monetary aggregate M2) as intermediate targets.",
    "Estimated income elasticity of money demand is lower than the elasticity currently applied by the Tunisian Central Bank (paper does not state the numerical elasticities on the landing page).",
    "Methodological proposal: adopt a different methodology for defining monetary growth targets consistent with the lower estimated income elasticity.",
    "Operational targets: both interest rates (T-bill rate) and reserve money are identified as feasible operating targets for the Central Bank.",
    "Reassess the income elasticity parameter used to convert nominal GDP projections into monetary growth targets, reflecting the paper’s lower estimated income elasticity.",
    "Consider defining monetary growth targets using the alternative methodology proposed in the paper (details in full paper).",
    "Orient monetary policy implementation toward more transparent operating targets, using either interest rate instruments or reserve money.",
    "Subjects: Banking, Demand for money, Financial institutions, Monetary aggregates, Monetary base, Money, National accounts, Personal income, Treasury bills and bonds",
    "Keywords: Asia and Pacific, Demand for money, inflation rate, interest rate target, Maghreb, monetary aggregate M2, Monetary aggregates, Monetary base, money demand, money demand function, Personal income, T-bill rate, targeted monetary aggregate, treasury bill, Treasury bills and bonds, WP",
    "**Broad Money Demand and Monetary Policy in Tunisia - WP/97/22**"
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