Politics and Consumer Prices in Africa

Simplice A, Asongu (2012): Politics and Consumer Prices in Africa.

Abstract

The motivations of the Arab Spring that have marked the history of humanity over the last few months have left political economists, researchers, governments and international policymakers pondering over how the quality of political institutions affect consumer welfare in terms of commodity prices. This paper investigates the effect of political establishments on consumer prices in the African continent. Findings suggest that in comparison with authoritarian regimes, democracies better provide for institutions that keep inflationary pressures on commodity prices in check. As a policy implication, improving the quality of democratic institutions will ameliorate consumer welfare through lower inflation rates. Such government quality institutional determinants include, among others: voice and accountability, rule of law, regulation quality, control of corruption and press freedom.

• Item Type: MPRA Paper
• Language: English
• Keywords: Consumer prices; Political institutions; Welfare; Africa
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I30 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q0 - General > Q00 - General; P - Economic Systems > P0 - General > P00 - General; P - Economic Systems > P5 - Comparative Economic Systems > P50 - General

References

Asongu, S. A.,(2011a), “Finance and democracy in Africa”, MPRA No. 35500.

Asongu, S. A., (2011b). “Law and investment in Africa”, MPRA Paper No.34700.

Asongu, S. A.,(2011c). “Law and finance in Africa”, MPRA Paper No. 34080.

Asongu, S.A., (2011d). “Why do French civil-law countries have higher levels of financial efficiency?”, MPRA Paper No.33950.

Beck, T., Demirgüç-Kunt, A., & Levine, R.,(2003). “Law and finance: why does legal origin matter?”, Journal of Comparative Economics, 31, pp. 653-675.

El Badawi, I., & Makdisi, S.,(2007), “Explaining the democracy deficit in the Arab world”, The Quarterly Review of Economics and Finance, 46, pp. 813-831.

Hendrix, C., Haggard, S., & Magaloni, B., (2009), “Grievance and Opportunity : Food Prices , Political Regime and Protest”, Paper prepared for presentation at the International Studies Association Convention, New York(August, 2009).

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R.W., (1997). “Legal Determinants of External Finance”, Journal of Finance, 52, pp. 1131-1150.

Stulz, R., M., & Williamson, R., (2003). “Culture, Openness and Finance”, Journal of Financial Economics, 70, pp. 313-349.

Yang, B.,(2011). “Does democracy foster financial development? An empirical analysis”, Economic Letters, 112, pp.262-265.