Spillover effects of armed conflicts on inflation in Sub-Saharan Africa

Purpose This study aims to examine Sub-Saharan Africa (SSA), a region characterized by recurring violence that affects economic activity and macroeconomic stability. Design/methodology/approach Using a Dynamic Spatial Durbin Model with fixed effects estimated via the generalized spatial two-stage least squares estimator, this paper examines both the direct and indirect effects of conflicts on national and regional inflation over the period 1997–2022. Findings Regardless of the type of conflict, countries affected by armed violence, as well as their neighbors, experience inflationary pressures. This inflationary dynamic becomes self-sustaining over time and space in a relatively stable socioeconomic environment. Practical implications The study recommends that Sub-Saharan African countries enhance regional security cooperation to mitigate the negative effects of conflicts on price stability. Originality/value The methodological rigor allowed us to prove that spatial transmission of inflation is influenced by factors such as the road distance between a country's capital and the neighboring port, highlighting regional economic interconnections that amplify inflation. Monetary and real factors, as well as security issues, significantly contribute to inflationary pressure in the region.