Covid-19 Shock: Pass-Through to Consumer Prices in Tunisia, Economic Research Forum Working Paper 1535

Tunisia - 1 February 2022

Trade topics: Trade Policy

In this paper, we evaluate the pass-through of the COVID-19 shock on international prices and trade policy to consumer prices in Tunisia. Specifically, we evaluate the extent to which changes in import unit values, tariffs, non-tariff measures, and new export restrictions imposed by Tunisia’s partner countries during COVID-19 are transmitted into consumer prices in Tunisia. Using monthly data from January 2018 to December 2020, a pass-through equation is estimated using sectoral panel data at the retail-product level, and we apply linear panel data techniques that account for unobserved heterogeneity in the dimensions of the panel. We augment the empirical specification with factors related to the current macroeconomic environment derived from the COVID-19 outbreak and persistence. The results provide important insights for Tunisian policymakers.