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Commodity price volatility, inflation uncertainty and political stability

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Abstract

The study examines the effect of fluctuations in prices of key internationally traded commodities, inflation, inflation uncertainty and macroeconomic uncertainty on political stability among emerging economies in Sub-Saharan Africa using panel data from 1996 to 2019. Empirical analysis examining the relationship in question is performed using pooled ordinary least squares with Driscoll and Kray (Rev Econ Stat 80(4):549-560, 1998) standard errors. Estimated results suggest that volatility in prices of crude oil, copper, and coal exert significant negative influence on political stability among economies in the sub-region. Further empirical estimates show that volatility in exchange rate denominated price of gold and natural gas on the international market have significant positive impact on political stability among economies in the sub-region. Our analysis additionally suggest that regulatory quality positively moderates the extent to which volatility in the price of copper ultimately impact political stability, but moderates negatively, the extent to which volatility in prices of gold and coal affect political stability among economies in the sub-region.

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Notes

  1. This conclusion is based on the overdependence of most of the economies in the region on such internationally traded commodities for budgetary support in implementing projects geared towards improving livelihoods.

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Authors and Affiliations

  1. University of Maryland Eastern Shore, Anne, USA

    Rexford Abaidoo

  2. Ghana Institutes of Public Administration, Accra, Ghana

    Elvis Kwame Agyapong

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  1. Rexford Abaidoo
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  2. Elvis Kwame Agyapong
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Correspondence to Rexford Abaidoo.

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Abaidoo, R., Agyapong, E.K. Commodity price volatility, inflation uncertainty and political stability. Int Rev Econ 69, 351–381 (2022). https://doi.org/10.1007/s12232-022-00395-3

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