Hassouna Moussa

Economic Policy and Economic Development in Tunisia

Since the end of the Second World War, we have witnessed a continuous expansion of the club of developed countries. The process accelerated during the 1970s and 1980s. Some countries, the newly industrialized countries (NICs), like Japan, South Korea, Taiwan and Singapore, achieved phenomenal growth rates. Others, like Tunisia, despite remarkable efforts achieved only moderate but fluctuating growth rates. The mean growth rate was 5.1 per cent and the standard deviation 3.6 per cent (see also chapter 4 in this volume).

Social value of public information re-examined

Abstract As an extension of Hirshleifers horse race example into a competitive exchange market framework, this paper quantitatively re-examines the condition under which social value of public information can be positive. For a prototype economy of two risk averse traders, we prove that their discordance of beliefs makes the social value of a certain class of inconclusive information either positive or negative depending on whether their endowments are or are not predominantly associated with states they regard as more probable, whereas it has been known that information acquisition is always socially wasteful under concordant beliefs.

The Uncertain Journey towards Inflation Targeting in Tunisia

The Tunisian authorities have announced that they will liberalise capital flows and move to convertibility of the Tunisian dinar (TND) by 2014 and that they intend to adopt a monetary policy of inflation targeting (IT) when the preconditions for it are met.1 The Tunisian government has also continued to confirm that the goal of its monetary policy is to ensure price stability and to strengthen its reliance on market forces,2 which is essential for the implementation of IT.

An Alternative Solution to the Moral Hazard Problem and Some Sufficient Conditions for Its Absence

Moral hazard is one of the problems that is believed to plague the insurance industry. A major aspect of the problem deals with the effect of the availability of insurance on the level of care exercised by the insured to reduce the probability of loss. When an insurance policy is not available against, say theft, an economic agent could devote time to watching over his property. At the extreme he could ensure that the probability of loss was zero, but the cost of such a strategy would likely be prohibitive. For such an instance the optimal action is to expend an effort less than that required to reduce the probability of theft to zero and hence to bear some risk. If we assume that economic agents are risk averse they would be willing to pay for a transfer of risk to another economic agent thereby enhancing their welfare. This transfer of risk is obtained through the purchase of an insurance policy. However if all goods are normal, the increase in welfare obtained from the purchase of insurance will be used to increase the consumption of leisure and that of other goods. As a consequence the purchase of insurance will cause the economic agents to expand less effort on the reduction of the probability of loss. That is, the optimal level of effort devoted to guarding against loss will depend on whether insurance is available.