Bootstrap causality between inflation uncertainty and output growth uncertainty in selected African countries

The study examines the causal relationship between inflation uncertainty and output growth uncertainty for selected African countries. Asymmetric BEKK GARCH-M model is used to derive measures of uncertainty for inflation and output growth, and bootstrap causality testing approach is used to examine the causal links between them. The findings suggest that Logue and Sweeney (1981) hypothesis and Devereux (1989) hypothesis are supported for Algeria and South Africa; a trade-off hypothesis of Taylor (1981) and Fuhrer (1997) is supported for Gabon, Libya and Tunisia; no causality whatsoever is found for Congo Republic and Nigeria, while for Libya and Tunisia, inflation uncertainty does not affect output growth uncertainty. Further studies are needed to shed more light on the relationship between these important macroeconomic variables for African countries which are still under-researched.