Abstract
This study investigated the relationship between commodity price shocks and output growth in Sub-Saharan African countries using panel data which covered the period between 2005 and 2017. Data for the study were sourced from the World Development Indicators (WDI). Data base of the World Bank, The IMF’S International Financial Statistics (IFM) and Publications of Central Banks of various countries selected. The study employed Generalized Movement Average (GMM) as the estimation technique. Findings from the study showed that positive changes in the prices of export commodities has little positive impact on macroeconomic performance in Sub-Saharan Africa while negative price change has negative and significant impact on macroeconomic performance in Sub-Saharan African countries during study period. Based on these findings, the study therefore concludes that the relationship between commodity price shocks and macroeconomic performance in Sub-Saharan Africa is asymmetric. The study recommends that countries in Sub-Saharan Africa should introduce and implement policies to withstand shocks that may come from commodity price shocks such as economic diversification not only in area of agriculture but also in the area of industrialization and manufacturing.
Highlights
This study investigated the relationship between commodity price shocks and output growth in Sub-Saharan African countries using panel data which covered the period between 2005 and 2017
In the result obtained on the effect of export commodity prices on real gross domestic product (GDP) growth, it was reviewed that the term of trade and inflation were statistically significant at 5% and 10% levels
A plausible reason for the statistically insignificant value of the coefficient of export commodity prices could be as a result of Dutch Disease phenomenon that characterized export commodity in SSA
Summary
This study investigated the relationship between commodity price shocks and output growth in Sub-Saharan African countries using panel data which covered the period between 2005 and 2017. Take for instance, Islamic extremists, such as Boko-Haram in Nigeria, Niger, Cameroon, Siea in Sudan, Islamic fundamentalist in Central Africa and the Niger delta militant in Nigeria These fluctuations in commodity price might have influenced the macroeconomic performance of SubSaharan African economies either positively or negatively. Majority of the countries in Sub-Saharan Africa might have had their economic growth been influenced positively or negatively, this might have occurred as a result of unstable commodity prices Inflation as it has been established by some studies Saliu (2004) Muham, (2000) and Godwin, (2007) is being driven by oil price changes and determined to some extent by food prices. Many of the African oil producing countries were exposed to different macroeconomic instability to an extent that some of their economies went into recession
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