Political Instability Nexus Inflation & Unemployment Trade off: Reexamination of Philips Curve and its Stability in Sub-Saharan Africa
DOI:
https://doi.org/10.53819/81018102t2310Abstract
The general objective was to conduct an empirical study on political instability nexus Inflation & Unemployment Tradeoff: Reexamination of Philip Curve and its Stability in Sub-Saharan Africa.The study conducted in 40 Sub-Saharan Africa member countries. This research design used panel data from the World Bank databank records related to Sub-Saharan Africa, which span 37 years (1986–2022), serve as the foundation for this study's analysis. This study's findings will benefit a wide range of parties, including academia, continents, and the economy, and will add to existing knowledge. The STATA software was used to perform the analysis on all of the data and estimation tests such as Unit root test, Kao cointegration, regression, lag selection and (Dynamic) Common Correlated Effects Estimator - Mean Group. Results confirmed the presence of a long-run relationship between the dependent variable (Inflation) and independent variables (Unemployment rate, GDP, Foreign Direct investment, Political instability and Population growth). The findings of this study indicate that the trade-off Phillips curve exists in Sub-Saharan Africa, and the relationship is stable over the long-run. Results revealed that unemployment, political instability, and foreign direct investment, exhibit a detrimental positive influence on inflation. Recommendations, policy makers in Sub-Saharan Africa should prioritize the development of policies aimed at effectively addressing inflation and unemployment, while also striving to stabilize the Philips curve. Additionally, Sub-Saharan Africa should implement economic policies that can enhance the likelihood of economic growth within the region's population. To achieve this, it is crucial for Sub-Saharan Africa to adopt fiscal and monetary policies that effectively mitigate economic issues especial during the period of political instability, as well as establish mechanisms that can effectively slow down population growth rates.
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