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The Impact of Political Instability on Inflation Volatility in Africa

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  • Florence Barugahara

Abstract

This paper investigates whether political instability leads to volatile inflation using a panel of 49 African countries. The study uses novel measures of political instability, particularly the state failure index and state fragility index. In the field of political instability and inflation volatility, this is the first study to measure inflation volatility as the conditional variance of inflation estimated from GARCH (1, 1) model. Adopting the system-generalized method of moments estimator for linear dynamic panel models for the sample period 1985-2009, the study documents a positive statistically significant effect of political instability on inflation volatility.

Suggested Citation

  • Florence Barugahara, 2015. "The Impact of Political Instability on Inflation Volatility in Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(1), pages 56-73, March.
  • Handle: RePEc:bla:sajeco:v:83:y:2015:i:1:p:56-73
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    File URL: http://hdl.handle.net/10.1111/saje.12046
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    Cited by:

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    2. de Mendonça, Helder Ferreira & Nascimento, Natalia Cunha, 2020. "Monetary policy efficiency and macroeconomic stability: Do financial openness and economic globalization matter?," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    3. Rexford Abaidoo & Elvis Kwame Agyapong, 2022. "Commodity price volatility, inflation uncertainty and political stability," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(3), pages 351-381, September.
    4. Strong, Christine Olivia, 2021. "Political influence, central bank independence and inflation in Africa: A comparative analysis," European Journal of Political Economy, Elsevier, vol. 69(C).
    5. Franses, Philip Hans & Janssens, Eva, 2018. "Inflation in Africa, 1960–2015," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 57(C), pages 261-292.
    6. Bruno Ferreira Frascaroli & Wellington Charles Lacerda Nobrega, 2019. "Inflation Targeting and Inflation Risk in Latin America," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(11), pages 2389-2408, September.

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