Revisit of Tunisia’s Money Demand Function: What About Oil Price and Exchange Rate Effects?

This paper examines the long run and short dynamic relationship between real broad money macroeconomic factors in Tunisia for period 2010M01 to 2019M07. We employ linear NARDL bound testing approach co-integration demand measure its determinants. Three broader variables (M2, M3, M4) are considered show that exchange rate have asymmetric significant effects once we introduce nonlinearity as well association. Then, by using (Shin et al., 2014) approach, currency appreciation depreciation could affect an manner. However, run, it is only oil price Tunisian Dinar (TD) which effect out of five (real income, interest rates, inflation, price, rate). Besides, QSUMSQ stability tests results reveal M3 function clearly stable. In implementing monetary policy, central bank (TCB) should target aggregate take into account changes stabilization.