Inflation Thresholds and Economic Growth in Sub-Saharan Africa: Institutional Evidence from Francophone and Anglophone Regimes

This study estimates inflation thresholds for economic growth in Sub-Saharan Africa (SSA) using Hansen's (1999) fixed-effects panel threshold regression applied to 47 countries over the period 1970–2023. The central contribution is a direct Francophone/Anglophone regime comparison exploiting the CFA franc monetary architecture as an institutionally predetermined source of heterogeneity predating the sample period.

The pooled SSA threshold is estimated at 5.19 percent, concealing a five-fold divergence between regimes: Francophone economies under the CFA franc fixed peg reach a growth-damaging inflation level at just 1.32 percent, while Anglophone economies with discretionary monetary policy tolerate inflation up to 6.60 percent before equivalent growth penalties emerge. Results are robust to bootstrap inference, 3-year and 5-year non-overlapping averaging windows, fixed-effects IV estimation, and two-step System GMM with collapsed internal lags.

The findings imply that uniform SSA-wide inflation targets are structurally misspecified for both regime groups simultaneously, and that differentiated, regime-specific benchmarks — particularly a sub-2 percent ceiling for CFA franc zone members — represent a correction to existing monetary policy guidance rather than a refinement of it.

The replication package includes all Stata do-files, cleaned panel datasets, and output logs required to reproduce the threshold estimation, robustness checks, and subsample regressions reported in the paper.