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Inflation and fiscal deficits in sub-Saharan Africa

Bleaney, Michael; Francisco, Manuela

Inflation and fiscal deficits in sub-Saharan Africa Thumbnail


Michael Bleaney

Manuela Francisco


Inflationary performance in sub-Saharan Africa since 1996 is examined. Median inflation has tended to be higher than in other regions of the developing world, such as MENA and Latin America. Inflation is highly persistent and is higher in countries that are less politically stable, in those without hard-peg exchange rate regimes, and in those with larger fiscal deficits. Inflation has declined over time, at least at the upper end of the distribution. There is no evidence that commitment devices such as inflation targeting have reduced inflation, but in SSA the sample is confined to two countries. Inflation typically spikes after a devaluation, and is sensitive to supply-side shocks. Movements in the real price of oil and rice (but not maize) have significantly affected the inflation rate. In countries that are poor in oil and minerals and therefore more reliant on agriculture, output growth is negatively correlated with inflation, presumably because, when the harvest is good and agricultural output is high, the extra supply reduces food prices. Fiscal balances also display considerable persistence and are more favourable in resource-rich and politically stable countries and in those with hard-peg exchange rate regimes, and have improved over time.

Journal Article Type Article
Acceptance Date Apr 13, 2016
Online Publication Date May 19, 2016
Publication Date Aug 10, 2016
Deposit Date Jun 30, 2016
Publicly Available Date Jun 30, 2016
Journal Journal of African Economies
Print ISSN 0963-8024
Electronic ISSN 1464-3723
Publisher Oxford University Press
Peer Reviewed Peer Reviewed
Volume 25
Issue 4
Pages 529-547
Keywords fiscal balance, inflation, price shocks
Public URL
Publisher URL
Additional Information This is a pre-copyedited, author-produced PDF of an article accepted for publication in Journal of African Economies following peer review. The version of record: Michael Bleaney and Manuela Francisco,
Inflation and Fiscal Deficits in Sub-Saharan Africa. J Afr Econ first published online May 19, 2016 doi:10.1093/jae/ejw009 is available online at:


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