Journal of Economics and Financial Analysis

This paper empirically investigates inflation dynamics in Sub-Saharan African economies within a New Keynesian Phillips Curve framework over the period 1995–2024. While the Phillips Curve has been extensively examined in advanced economies, evidence from Sub-Saharan Africa remains fragmented and inconclusive. Using a panel of Sub-Saharan African countries and a hybrid New Keynesian Phillips Curve estimated via Generalized Method of Moments, the study evaluates the relative importance of forward-looking expectations, inflation persistence, and real economic slack. The findings indicate that inflation in the region is characterized by strong persistence and a limited forward-looking component, with marginal costs providing a more robust measure of inflationary pressure than output gaps. The Phillips relationship weakens substantially during periods of macroeconomic instability, supporting the view that the inflation–activity trade-off in Sub-Saharan Africa is conditional on the economic environment. The results highlight the importance of structural and institutional factors in shaping inflation dynamics and suggest that standard New Keynesian models require regional adaptation when applied to low- and middle-income economies.

New Keynesian Phillips Curve; Inflation Dynamics; Sub-Saharan Africa; Expectations; Marginal Costs; Panel GMM.

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