Growth Effect of Inflation in Central African Countries: Does Security Situation Matter?

Guivis Zeufack Nkemgha (), Moses Abit Ofeh () and Boker Poumie ()
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Guivis Zeufack Nkemgha: Higher Teacher Training College, University of Bamenda
Moses Abit Ofeh: Higher Teacher Training College, University of Bamenda
Boker Poumie: University of Maroua

Journal of the Knowledge Economy, 2023, vol. 14, issue 3, No 53, 3409-3430

Abstract: Abstract Despite the growing literature on the determinants of inflation on the one hand and the effect of inflation on economic growth on the other hand, little is known about the role of insecurity in these analyses, particularly in the Central African countries. This paper aims to contribute to the understanding of other neglected aspects of inflation by analyzing both its origins and its effects on the economy through the role of the security situation. The use of the system GMM on a panel of Central African countries during the period 2011–2017 reveals that, apart from traditional sources (money supply, economic growth, and oil rent), insecurity is also one of the origins of inflation. Moreover, inflation promotes economic growth while insecurity hinders it. Finally, the results also show that the coexistence of inflation and insecurity significantly constrains the production capacity of the economies of the sub-region. Thus, the resolution of the various present conflicts (internal and border) and the anticipation of possible future ones will make it probably to control the level of inflation as well as to eliminate this constraint which limits the production capacity of the economies of Central Africa.

Keywords: Inflation; Insecurity; Production capacity (search for similar items in EconPapers)
JEL-codes: D74 E31 F43 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s13132-022-01008-8

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