Testing the Long-Run Relationship Between Oil Price and Inflation in Tunisia: A Fourier CUSUM Cointegration Test

This study examines the relationship between oil prices and inflation in Tunisia using data from 1985 to 2024. Applying the innovative Fourier CUSUM test, the findings indicate no long-run connection between the two variables, suggesting that subsidy policies effectively buffer Tunisia from global oil price shocks. However, QARDL results reveal short-term asymmetries: oil price increases cause temporary rises in inflation, while natural gas prices have a dampening effect. Overall, these results highlight the stabilizing - yet fiscally risky - role of subsidies, offering valuable insights for energy-importing economies.