Inflation, inflation volatility and terrorism in Africa

The dataset is employed to provide an answer to this question: can inflation or inflation volatility incites terrorism? This question is salient as there is a latent belief that both can actually produce hardships for people, making them to be economically deprived and aggrieved, thereby reducing their opportunity costs of rebellion against the incumbent government. This study answers the above raised question using a negative binomial regression on 38 African economies over the period 1980-2012, in which the following findings are established. Inflation volatility and not inflation per se constitutes a significant predictor of terrorism, particularly, for the domestic terrorist activity over the period of coverage. The prevailing impacts of other confounding variables such as surface areas, ethnicity, physical integrity rights, as well as the lagged value of terrorism are consistently notable across the model specifications. Thus, the paper argues that the non-statistical significance of inflation does not render it less important as it provides an enabling environment for which inflation volatility thrives.