An estimation of tariff pass-through in Tunisia

Tunisia - 1 August 2015

In this paper we evaluate the extent to which changes in tariffs and in international
prices are transmitted into consumer prices in Tunisia over the period 2000 to 2008. A
pass-through equation is estimated using sectoral panel data at the retail-product level
and controlling for unobserved sectoral heterogeneity. The main result indicates that
changes in tariffs are only partially transmitted to changes in retail prices, with an
average pass-through of 10 percent. This partial pass-through effect is lower in
magnitude than the one found in other developing-country studies. This finding might
be explained by the fact that trade liberalization in Tunisia is not well supported by
trade related institutions and policies such a stable macroeconomic environment, a
competitive exchange rate and competitive policies.

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