Exchange Policy and Economic Growth: Effect of the Real Effective Exchange Rate Misalignment on the Growth of Tunisia

Sfaxi, Hend and Redžepagić, Srđan (2010) Exchange Policy and Economic Growth: Effect of the Real Effective Exchange Rate Misalignment on the Growth of Tunisia. Economic analysis, 43 (3-4). pp. 15-28. ISSN 1821-2573

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Abstract

The collapse of the system of Bretton Woods pushed Tunisia adopted various policies of exchange to avoid imbalances of the balance of payments. Since, this country aimed to maintain or to improve its external competitiveness in order to balance its current account through the promotion of exports, this contribute to start again the economic growth. By specifying an equation of economic growth of Tunisia, it’s showed that the real effective exchange rate misalignment, indicator of external competitiveness, has negative effect on the economic growth. The fall of real effective exchange rate misalignment, these last years, then explained partly the stabilization of the growth rate of this country can especially since 2001 when the Tunisia softened its policy of exchange rate. A flexible policy of exchange is then desirable to start again the economic growth.

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