International Journal of Multidisciplinary Research and Publications ISSN (Online): 2581-6187 47 Mohamed Ghandri and Hassen Soltani, “The Impact of Inflation and Exchange Rate Volatility on Economic Growth: Evidence from ARDL Model for Tunisia,”International Journal of Multidisciplinary Research and Publications (IJMRAP), Volume 5, Issue 5, pp. 47-51, 2022. The Impact of Inflation and Exchange Rate Volatility on Economic Growth: Evidence from ARDL Model for Tunisia Mohamed Ghandri 1 , Hassen Soltani 2 1, 2 Department of Administration, College of Science and Arts in Balgarn, University of Bisha, P. O. Box 199, Bisha, 61922, Saudi Arabia 1, 2 Business Department, Faculty of Economic Sciences and Management of Tunis El Manar (FSEGT), Tunisia Email address: 1 mghandri@ub.edu.sa, 2 hsoltani@ub.edu.sa Abstract—In recent years, mainly during the Covid 19 period, many studies have demonstrated the existence of a causal relationship between economic growth and these main determinants. This article seeks to examine the short and long term relationships between economic growth, inflation, trade balance, real exchange rates, income and money supply in the case of Tunisia. Using the testing approach related to cointegration and error correction models, developed in an autoregressive distributed lag (ARDL) framework, we examine whether there is a long-run equilibrium relationship between the economics growth and the determinants. Using this approach, we find evidence of a long-term relationship between GDP economic growth, money supply, inflation and the real exchange rate. The limit testing approach of cointegration and error correction models, developed in an autoregressive distributed lag (ARDL) is applied to annual data for the period 1990 to 2021 in order to examine whether there is a long-term equilibrium relationship between economic growth and the main macroeconomic variables. The result of the limit test indicates that there is a long-term two-way causal relationship between economic growth, inflation, money supply, money market rate. The estimated results show that the model variables are positively related in the long and short term. Keywords—Economic growth; ARDL; Panel econometrics; real exchange rates. I. INTRODUCTION The objective of the monetary authorities is to stimulate growth through the stabilization of inflation as well as exchange rate volatility. The link between economic growth and inflation, interest rate, money supply, the exchange rate has been the subject of considerable interest in recent decades, more specifically during the period of pandemic COVID- 19. The central banks of the countries in developing countries such as Tunisia seek to apply monetary policy to deal with any variation in exchange rates and inflation to stimulate economic growth. Let us cite the case of Tunisia as a candidate country which seeks to guarantee a certain price stability, strengthen macroeconomic stability to improve the credibility of the central bank and thus stimulate budgetary discipline with a view to improving economic growth. However, according to Svensson (2000), the existence of a stable and predictable relationship between the instruments of monetary policy is one of the most important conditions for improving economic growth. In this article, we will analyze the short-term and long-term equilibrium relationships that have studied the static links between the instruments of monetary policy, inflation, the exchange rate and the gross domestic product. We will check whether the monetary policy transmission links meet the inflation target and therefore verify the stability and solidity of the monetary policy transmission links. In our empirical study, we rely on the evaluation of this equilibrium relationship, with regard to the effectiveness of the different transmission channels of monetary policy in the Tunisian economy, through a study of the short and the long term between the key macroeconomic variables which constitute the monetary policy instruments most applied by the central bank of Tunisia, M.Ghandri et al (2021). In this article, we will analyze the short-term and long-term equilibrium relationships that have studied the static links between the instruments of monetary policy, inflation, the exchange rate and the gross domestic product. We will check whether the monetary policy transmission links meet the inflation target and therefore verify the stability and solidity of the monetary policy transmission links. In our empirical study, we base ourselves on the evaluation of this equilibrium relationship, with regard to the effectiveness of the various transmission channels of monetary policy in the Tunisian economy, through a study of the short-term relationship. and in the long term between the key macroeconomic variables which constitute the monetary policy instruments most applied by the central bank of Tunisia. The rest of the article is organized as follows: Section 2 reviews the literature on the relationship between the consumer price index, economic growth, the nominal exchange rate and trade openness. In section 3, we discuss the methodology employed in our article. Section 4 presents the data characteristics and results of the Autoregressive Distributed Lag (ARDL) analysis. Finally, Section 5 concludes. II. LITERATURE REVIEW In particular, the question whether inflation and exchange rate volatility is necessary or harmful to economic growth has generated theoretical debate and illustrated by empirical results. The question has generated a persistent debate between monetarists and the structuralists. Structuralists believe that