The inflation and economic growth nexus in Gabon, Kenya, and South Africa: an empirical analysis, 1961-2012

The main aim of this research is to investigate the nature of the relationship between inflation and economic growth. Over the years theoretical and empirical studies have presented different views about the relationship. Literatures on the topic have reported three types of results on the relationship between inflation and growth, positive relationship, negative relationship, and non-existence of any type of relationship between the two variables. This study analyzes empirically the inflation and growth nexus using time series data from three countries in Sub-Saharan African, obtained from the World Bank database. The countries under study are Gabon, Kenya, and South Africa. The methodologies employed in the study are ADF Unit root test, Granger causality test, and OLS. The empirical results reveal that the relationship between inflation and economic growth is long run, nonlinear, negative, and significant for Kenya and South African, while it is found to be insignificant in Gabon. From the empirical results, the study has recommended some appropriate policies. --Leaf ii.