Abstract
This paper intends to analyze the dynamics of monetary policy in Tunisia during the last decade. In particular, we seek to explain the main factors that have hindered the achievement of the paramount objective of the monetary authority to stabilize prices. To do this, we used a dynamic stochastic general equilibrium (DSGE) model, of a small open economy. The model is estimated by using Bayesian techniques and includes three different types of structural shocks. We found that the output gap is less sensitive to interest rates, which reduces the impact of the real effects of the monetary policy shocks on aggregate demand. Moreover, Tunisia's central bank has not followed during the 2000s an offensive and stabilizing monetary policy, given that the nominal interest rate reacts less to inflation deviations from its target and actively to fluctuations in production from its retarded level.