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Inflation and Economic Growth: Evidence from the Southern African Development Community

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  • Manoel Bittencourt
  • Reneé Eyden
  • Monaheng Seleteng

Abstract

In this paper, we investigate the role of inflation rates in determining economic growth in 15 sub-Saharan African countries, which are all members of the Southern African Development Community, between 1980 and 2009. The results, based on panel time-series data and analysis (we use the fixed effects and fixed effects with instrumental variables estimators to account for heterogeneity and endogeneity in thin panels), suggest that inflation has had a detrimental effect to growth in the community. We highlight that inflation has offset the Mundell–Tobin effect and consequently reduced the much needed economic activity in the community, and also the importance of an institutional framework conducive to a stable macroeconomic environment as a precondition for development and prosperity in the community.

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  • Manoel Bittencourt & Reneé Eyden & Monaheng Seleteng, 2015. "Inflation and Economic Growth: Evidence from the Southern African Development Community," South African Journal of Economics, Economic Society of South Africa, vol. 83(3), pages 411-424, September.
    • Handle: RePEc:bla:sajeco:v:83:y:2015:i:3:p:411-424
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    Cited by:

    1. Malefane, Malefa R & Odhiambo, Nicholas M, 2018. "Trade openness and economic growth: empirical evidence from Lesotho," Working Papers 23787, University of South Africa, Department of Economics.
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    3. Mavikela Nomahlubi & Mhaka Simba & Phiri Andrew, 2019. "The Inflation-Growth Relationship in SSA Inflation-Targeting Countries," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 64(2), pages 84-102, August.
    4. Muhammad Azmat Hayat & Huma Ghulam & Maryam Batool & Muhammad Zahid Naeem & Abdullah Ejaz & Cristi Spulbar & Ramona Birau, 2021. "Investigating the Causal Linkages among Inflation, Interest Rate, and Economic Growth in Pakistan under the Influence of COVID-19 Pandemic: A Wavelet Transformation Approach," JRFM, MDPI, vol. 14(6), pages 1-22, June.
    5. Isaac K. Ofori & Camara K. Obeng & Simplice A. Asongu, 2024. "What Really Drives Economic Growth in Sub-Saharan Africa? Evidence from the Lasso Regularization and Inferential Techniques," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 144-179, March.
    6. Mduduzi Biyase & September Rooderick, 2017. "Determinants of Growth in SADC Countries: A Fixed Effect Vector Decomposition Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 746-751.
    7. Mosab I. Tabash & Umar Farooq & Samir K. Safi & Muhammad Nouman Shafiq & Krzysztof Drachal, 2022. "Nexus between Macroeconomic Factors and Economic Growth in Palestine: An Autoregressive Distributed Lag Approach," Economies, MDPI, vol. 10(6), pages 1-14, June.
    8. Muhammad Ayyoub & Julia Wörz, 2021. "Inflation‐growth nexus in developing economies: New empirical evidence from a disaggregated approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 241-257, January.
    9. P. B. Zondi & Z. Robinson, 2021. "The Relationship between Government Debt and Economic Growth in South Africa with Specific Reference to Eskom," EuroEconomica, Danubius University of Galati, issue 2(40), pages 17-34, November.
    10. Malefa R. Malefane & Nicholas M. Odhiambo, 2021. "Trade Openness and Economic Growth: Empirical Evidence from Lesotho," Global Business Review, International Management Institute, vol. 22(5), pages 1103-1119, October.
    11. MALEFANE , Malefa Rose & ODHIAMBO, Nicholas M., 2018. "Impact of Trade Openness on Economic Growth: Empirical Evidence from South Africa," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(4), pages 387-416.
    12. Kossi Ayenagbo, 2023. "Analyse de l'effet empirique de l'intégration économique sur la croissance sectorielle en Afrique Subsaharienne: quelle implication de la gouvernance?," African Development Review, African Development Bank, vol. 35(1), pages 52-64, March.
    13. ouhibi, saoussen & hammami, sami, 2018. "Does Public Debt Matter For Economic Growth? Evidence from southern Mediterranean countries," MPRA Paper 86378, University Library of Munich, Germany, revised 16 May 2018.

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