EFFECTS OF MACROECONOMIC POLICIES ON INCOME GROWTH, INFLATION, AND OUTPUT GROWTH IN SUB-SAHARAN AFRICA

This study investigates the effects of macroeconomic policies on nominal income growth, inflation, and output growth with data for 33 countries in Sub-Saharan Africa during 1970-87. The main results, which are consistent with several theoretical regularities, can be summarized as follows: (1) money growth, currency devaluations, and increases in the budget deficit ratio are all inflationary, although the impact of money growth dominates the inflation process; (2) increases in the budget deficit ratio and the rate of inflation have adverse effects on output growth; and (3) currency devaluations have expansionary effects on output growth.