Inflation-poverty causal nexus in sub-Saharan African countries: an asymmetric panel causality approach
Purpose – This study examines the roles of cross-sectional dependence, asymmetric structure and country-to-country policy variations in the inflation-poverty reduction causal nexus in selected sub-Saharan African (SSA) countries from 1981 to 2019. Design/methodology/approach – To account for cross-s...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2024-04-01
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| Series: | International Trade, Politics and Development |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/ITPD-08-2023-0024/full/pdf |
| _version_ | 1797212993803517952 |
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| author | Clement Olalekan Olaniyi Nicholas M. Odhiambo |
| author_facet | Clement Olalekan Olaniyi Nicholas M. Odhiambo |
| author_sort | Clement Olalekan Olaniyi |
| collection | DOAJ |
| description | Purpose – This study examines the roles of cross-sectional dependence, asymmetric structure and country-to-country policy variations in the inflation-poverty reduction causal nexus in selected sub-Saharan African (SSA) countries from 1981 to 2019. Design/methodology/approach – To account for cross-sectional dependence, heterogeneity and policy variations across countries in the inflation-poverty reduction causal nexus, this study uses robust Hatemi-J data decomposition procedures and a battery of second-generation techniques. These techniques include cross-sectional dependency tests, panel unit root tests, slope homogeneity tests and the Dumitrescu-Hurlin panel Granger non-causality approach. Findings – Unlike existing studies, the panel and country-specific findings exhibit several dimensions of asymmetric causality in the inflation-poverty nexus. Positive inflationary shocks Granger-causes poverty reduction through investment and employment opportunities that benefit the impoverished in SSA. These findings align with country-specific analyses of Botswana, Cameroon, Gabon, Mauritania, South Africa and Togo. Also, a decline in poverty causes inflation to increase in the Congo Republic, Madagascar, Nigeria, Senegal and Togo. All panel and country-specific analyses reveal at least one dimension of asymmetric causality or another. Practical implications – All stakeholders and policymakers must pay adequate attention to issues of asymmetric structures, nonlinearities and country-to-country policy variations to address country-specific issues and the socioeconomic problems in the probable causal nexus between the high incidence of extreme poverty and double-digit inflation rates in most SSA countries. Originality/value – Studies on the inflation-poverty nexus are not uncommon in economic literature. Most existing studies focus on inflation’s effect on poverty. Existing studies that examine the inflation-poverty causal relationship covertly assume no asymmetric structure and nonlinearity. Also, the issues of cross-sectional dependence and heterogeneity are unexplored in the causal link in existing studies. All panel studies covertly impose homogeneous policies on countries in the causality. This study relaxes this supposition by allowing policies to vary across countries in the panel framework. Thus, this study makes three-dimensional contributions to increasing understanding of the inflation-poverty nexus. |
| first_indexed | 2024-04-24T10:51:13Z |
| format | Article |
| id | doaj.art-94494dba7ad94cf288b10a25c15f564f |
| institution | Directory Open Access Journal |
| issn | 2586-3932 2632-122X |
| language | English |
| last_indexed | 2024-04-24T10:51:13Z |
| publishDate | 2024-04-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | International Trade, Politics and Development |
| spelling | doaj.art-94494dba7ad94cf288b10a25c15f564f2024-04-12T12:31:46ZengEmerald PublishingInternational Trade, Politics and Development2586-39322632-122X2024-04-0181346410.1108/ITPD-08-2023-0024Inflation-poverty causal nexus in sub-Saharan African countries: an asymmetric panel causality approachClement Olalekan Olaniyi0Nicholas M. Odhiambo1Department of Economics, College of Economic and Management Sciences, University of South Africa, Pretoria, South AfricaDepartment of Economics, University of South Africa, Pretoria, South AfricaPurpose – This study examines the roles of cross-sectional dependence, asymmetric structure and country-to-country policy variations in the inflation-poverty reduction causal nexus in selected sub-Saharan African (SSA) countries from 1981 to 2019. Design/methodology/approach – To account for cross-sectional dependence, heterogeneity and policy variations across countries in the inflation-poverty reduction causal nexus, this study uses robust Hatemi-J data decomposition procedures and a battery of second-generation techniques. These techniques include cross-sectional dependency tests, panel unit root tests, slope homogeneity tests and the Dumitrescu-Hurlin panel Granger non-causality approach. Findings – Unlike existing studies, the panel and country-specific findings exhibit several dimensions of asymmetric causality in the inflation-poverty nexus. Positive inflationary shocks Granger-causes poverty reduction through investment and employment opportunities that benefit the impoverished in SSA. These findings align with country-specific analyses of Botswana, Cameroon, Gabon, Mauritania, South Africa and Togo. Also, a decline in poverty causes inflation to increase in the Congo Republic, Madagascar, Nigeria, Senegal and Togo. All panel and country-specific analyses reveal at least one dimension of asymmetric causality or another. Practical implications – All stakeholders and policymakers must pay adequate attention to issues of asymmetric structures, nonlinearities and country-to-country policy variations to address country-specific issues and the socioeconomic problems in the probable causal nexus between the high incidence of extreme poverty and double-digit inflation rates in most SSA countries. Originality/value – Studies on the inflation-poverty nexus are not uncommon in economic literature. Most existing studies focus on inflation’s effect on poverty. Existing studies that examine the inflation-poverty causal relationship covertly assume no asymmetric structure and nonlinearity. Also, the issues of cross-sectional dependence and heterogeneity are unexplored in the causal link in existing studies. All panel studies covertly impose homogeneous policies on countries in the causality. This study relaxes this supposition by allowing policies to vary across countries in the panel framework. Thus, this study makes three-dimensional contributions to increasing understanding of the inflation-poverty nexus.https://www.emerald.com/insight/content/doi/10.1108/ITPD-08-2023-0024/full/pdfInflationPovertyCross-sectional dependenceAsymmetric causality |
| spellingShingle | Clement Olalekan Olaniyi Nicholas M. Odhiambo Inflation-poverty causal nexus in sub-Saharan African countries: an asymmetric panel causality approach International Trade, Politics and Development Inflation Poverty Cross-sectional dependence Asymmetric causality |
| title | Inflation-poverty causal nexus in sub-Saharan African countries: an asymmetric panel causality approach |
| title_full | Inflation-poverty causal nexus in sub-Saharan African countries: an asymmetric panel causality approach |
| title_fullStr | Inflation-poverty causal nexus in sub-Saharan African countries: an asymmetric panel causality approach |
| title_full_unstemmed | Inflation-poverty causal nexus in sub-Saharan African countries: an asymmetric panel causality approach |
| title_short | Inflation-poverty causal nexus in sub-Saharan African countries: an asymmetric panel causality approach |
| title_sort | inflation poverty causal nexus in sub saharan african countries an asymmetric panel causality approach |
| topic | Inflation Poverty Cross-sectional dependence Asymmetric causality |
| url | https://www.emerald.com/insight/content/doi/10.1108/ITPD-08-2023-0024/full/pdf |
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