Capital account liberalization and economic growth in Tunisia

The impact of capital account liberalization on economic growth remains a hotly debated topic, sparking lively discussions among various economic trends. This paper aims to highlight the nature of this relationship in Tunisia over the period 1984–2020. To achieve this objective, we employ the Autoregressive Distributed Lag (ARDL) method. The main findings indicate that, in the short run, the influences of capital account liberalization, institutional and financial development and trade openness on economic growth are mixed, while in the long run, these factors have significantly positive impacts on economic growth. These outcomes have crucial financial and political implications. Financial authorities and policymakers are invited to enhance financial efficiency by reducing the costs associated with acquiring and processing information on potential customers, thereby fostering economic growth. Additionally, policymakers should make more efforts to improve institutional quality by implementing efficient regulatory procedures, while maintaining a stable macroeconomic environment.