Energy Price Inflation and Real Output Nexus in Selected Sub‐Saharan African Economies

ABSTRACT This study makes a novel contribution to the empirical literature by leveraging a distinctive data set on energy price inflation to examine its influence on real gross domestic product (GDP) growth in eight sub‐Saharan African countries from 1992 to 2023. By utilizing the Augmented Mean Group and Cross‐Sectional Autoregressive Distributed Lag estimations, the study finds that, in the short term, a rise in energy price inflation does not have a significant effect on real GDP growth. However, over the long run, a 1% increase in energy price inflation is associated with a 0.06% growth decline. The adverse long‐run effects are particularly notable in Burkina Faso and Nigeria, where a 1% rise in energy price inflation reduces growth by 0.25% and 0.03%, respectively. Considering the region's dependence on fossil fuels, a shift toward renewable energy sources may be a viable strategy to cushion the economic impact of a rise in energy costs.