A HISTORIOGRAPHIC ANALYSIS OF THE CAUSES OF THE ECONOMIC CYCLE IN TUNISIA

This paper presents a historiographical analysis of the Tunisian business cycle sources between the 1st quarter of 1970 and the 2nd quarter of 2002. The study begins, using the industrial production index, with a retrospective exam of the output gap which provides an economic diagnosis of the cyclical movement causes. Then, the causes of the cycles between supply and demand shocks, internal and external, are examined. After that, a VAR model of a small open economy helps determine the real weight of the different shocks in the cyclical movements. The active phases of strong volatility are isolated from the quiet phases of weak volatility. The conclusions are reached, that: 1. The Tunisian economy is vulnerable to domestic shocks, supply and demand, as well as to the evolution of the international cycle. 2. There is a preponderance of supply internal shocks in the explanation of the business cycle and internal demand shocks exercise a relatively weak effect. 3. The external shocks contribution is relatively weak and is fundamentally explained by supply shocks. 4 The cyclical movements between 1980 and 1990 are characterized by an active period of strong volatility followed by a relatively quiet period (1990-2002). Reproduced by permission of Bibliothèque de Sciences Po