Journal of
African Studies and Development

  • Abbreviation: J. Afr. Stud. Dev
  • Language: English
  • ISSN: 2141-2189
  • DOI: 10.5897/JASD
  • Start Year: 2009
  • Published Articles: 202

Full Length Research Paper

Dynamics of inflation and its impact on economic growth in selected East African Countries: Ethiopia, Sudan and Kenya

Abdelkreem Youse
  • Abdelkreem Youse
  • Institute of Agriculture and Development Studies, Department of Development Economics, St. Mary's University, Ethiopia.
  • Google Scholar
Sisay Debebe
  • Sisay Debebe
  • Department of Economics, College of Business and Economics, Addis Ababa University, Ethiopia.
  • Google Scholar


  •  Received: 05 September 2020
  •  Accepted: 07 January 2021
  •  Published: 31 January 2021

Abstract

Despite Ethiopia's, Sudan's, and Kenya's fastest-growing economies' performance over the last two decades, the overall average inflation rate remains double digits. It subsequently incorporates a detrimental impact to support economic growth in an extended period. This study aims to assess the dynamics of inflation and its impacts on economic growth Ethiopia, Kenya, and Sudan using time-series macroeconomic data collected from the African Development Bank. The research used the Autoregressive Distributed Lag (ARDL) econometrics model and investigated the presence of cointegration and long-term relationships between macroeconomic factors. The result indicates that the exchange rate and the supply of the long-run economic growth rate influence Ethiopia's money supply. Inflation rates and foreign direct investments have impacted economic growth rates in Kenya and Sudan. The economic growth rate in all counties is generally influenced by both the availability of money and the exchange rate—also, real per capita GDP affecting the economic growth rate of Sudan and Ethiopia. Policies on introducing new technologies, building capacities in public and private sectors, youth and gender parity, mobilizing domestic resources, and public participation are recommended for Ethiopia, Kenya, and Sudan.

 

Key words: Inflation dynamics, real GDP growth rate, ARDL model, Ethiopia, Kenya and Sudan.