Determinants of Inflation in Sub-Saharan Africa: A Systematic Review

Abstract

Macroeconomic stability is the central aim of policymakers of most nations. Inflation is considered a crucial element of Macroeconomic stability. Empirical evidences confirmed the long-run effect of some macroeconomic variables on inflation. The major objective of the study was to investigate the main determinants of inflation in sub-Saharan African countries. The study used a systematic review technique. The relevance of the topic and geographical area were considered toinclude previous studies for review purpose. In-depth literature review has been done on 11 studies undertaken in 9 sub-Saharan African countries. Accordingly, among the eight variables used for analysis, GDP, Broad money supply, Real exchange rate, and interest rate are the main source of inflation. Import prices, Inflation expectations, public expenditure, and oil prices are found to determine inflation slightly. Accordingly as most of Sub-Saharan countries are on the path of development high considerations should be given for inflationary effect of GDP. Money supply also should get special attention by central banks as it is found to be the second most inflationary factor among other variables. The effects of Real exchange rate and interest rate on inflation also need the attention of policy makers in order to preserve macroeconomic stability