Energy Price Inflation and Real Output Nexus in Selected Sub-Saharan African Economies

This study makes a novel contribution to the empirical literature by leveraging a distinctive data set on energy price inflation to examine its influence on real gross domestic product (GDP) growth in eight sub-Saharan African countries from 1992 to 2023. By utilizing the Augmented Mean Group and Cross-Sectional Autoregressive Distributed Lag estimations, the study finds that, in the short term, a rise in energy price inflation does not have a significant effect on real GDP growth. However, over the long run, a 1% increase in energy price inflation is associated with a 0.06% growth decline. The adverse long-run effects are particularly notable in Burkina Faso and Nigeria, where a 1% rise in energy price inflation reduces growth by 0.25% and 0.03%, respectively. Considering the region's dependence on fossil fuels, a shift toward renewable energy sources may be a viable strategy to cushion the economic impact of a rise in energy costs.