Analysis reveals the influence of inflation and shocks on growth and exchange rates in African countries, indicating the need for targeted economic policies.
Abstract This study examines how a shock-dependent Phillips Curve affects economic growth and exchange rate changes in six African nations between 1980 and 2024. Using PSVAR, CIR, and panel GLM approaches, the study shows how inflation affects economic growth and exchange rates differs by country and shock type. Key findings include the negative consequences of supply-side shocks in structurally weak countries, as well as different exchange rate reactions influenced by monetary frameworks. The paper emphasizes the importance of structural determinants and policy credibility in managing inflation and exchange rate volatility, and it recommends state-contingent monetary policies as well as improved transmission channels.
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Hassan Tawakol Ahmed Fadol (2025) studied this question.
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