The Impact of Political Instability on Inflation Volatility in Africa |
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Authors: | Florence Barugahara |
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Institution: | 1. +447553730086;2. Department of Economics, University of Leicester, Leicester, United Kingdom |
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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. |
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Keywords: | E31 E63 Inflation volatility political instability system‐GMM |
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