Inflation and Economic Growth in Sub-Saharan Africa: The Role of Institutions

Dieudonné Mignamissi (), Séraphin Brice Minkoé Bikoula () and Thierno Thioune ()
Additional contact information
Dieudonné Mignamissi: University of Yaounde II
Séraphin Brice Minkoé Bikoula: The University of Dschang
Thierno Thioune: Cheikh Anta Diop University

Journal of Quantitative Economics, 2023, vol. 21, issue 4, No 6, 847-871

Abstract: Abstract The objective of this paper is to revisit the non-linearity of the inflation-growth relationship in Sub-Saharan Africa, with a focus on the role of institutional quality apprehended by the level of democracy. Empirically, we used the Panel Smooth Transition Regression (PSTR) model to estimate the optimal inflation threshold from which the inflation-growth relationship changes sign. In a rather particular way, we appreciate the sensitivity of the estimation of the optimal threshold according to three modalities of the political regime, namely the democratic regime, the anocratic regime and the authoritarian regime. Over the period 2002–2015, we arrive at the following main findings: 1. the inflation-growth non-linearity is validated, attesting to a single inflation threshold or two inflation regimes; 2. the optimal inflation threshold is estimated at 12.23% in Sub-Saharan Africa. In other words, the inflation-growth relationship is positive (negative) for any level of inflation below (above) this threshold; 3. the mediating effect of institutions, captured by the quality of the political regime, is significant in explaining the nonlinear inflation-growth relationship in Sub-Saharan Africa. This result also shows that the weight of the mediating effect of the political regime is greater in authoritarian regimes. Based on these results, a set of policies is advised.

Keywords: Economic growth; Inflation; Institutions; PSTR; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: E00 E02 O10 O11 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s40953-023-00366-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jqecon:v:21:y:2023:i:4:d:10.1007_s40953-023-00366-7

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40953

DOI: 10.1007/s40953-023-00366-7

Access Statistics for this article

Journal of Quantitative Economics is currently edited by Dilip Nachane and P.G. Babu

More articles in Journal of Quantitative Economics from Springer, The Indian Econometric Society (TIES) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().