Effect of Inflation on Output Growth in African Oil Producing Countries.

Abstract

Price stability as a major objective of monetary policy is acknowledged based on the fact that high inflation is detrimental to the growth of an economy and effective functioning of a market economy. This study, therefore, set out to examine the effect of inflation on output growth in African oil producing countries using annual data spanning from 1986 to 2022. The study employed panel data analysis to estimate the stated objectives of the Study. The ARDL Panel model result revealed that both in the short and the long run, money supply has significant positive relationship with Gross Domestic Product. The findings of the study also exhibited that both in the short and long run; there is insignificant negative relationship between exchange rate, interest rate and the real GDP. Government expenditure in both short and long run as well has negative impact on real Gross Domestic Product but in the long run, it is significant. Moreover, inflation has insignificant impact in both short and long run on real GDP but it maintain positive relationship in the long run while on the short run, it is negative. In line with the findings of this study, it was recommended that governments of African oil producing countries should intensify efforts to channel the income realizing from oil production into productive investments and capital projects like provision of industries and infrastructures which can create employment and wealth for the countries involved in this study.