Tunisian Business Cycle Synchronization with the Euro-Mediterranean Partner Countries

Abstract

Throughout the scope of this paper, we are proposing synchronism estimation between Tunisian and some Northern Mediterranean countries industrial cycles. To note, several methods have been used to measure the business cycles synchronization, among which the concordance index constructed via a Markov switching model.
Using monthly industrial production data ranging from 1994:01 to 2007:12, empirical results indicate that, when taken into account the delay effect, there exists some kind of convergence between Tunisia and the Euro-Mediterranean countries. Consequently, the Tunisian industrial cycles seem to be closely linked to those of Euro-Mediterranean countries. Yet, the significant asymmetries prevailing among these countries, subject of our current study, we think that the process of the Barcelona Agreement has a great role to play in reinforcing bilateral trade in the region. Hence, the creation of a Mediterranean union is encouraged for the achievement of a closer convergence between Mediterranean countries.