• exchange rate
• real interest rate
• Panel data
• Hausman test
• institutional credibility
• Money Supply
• Inflation Targeting
• Monetary policy
• Inflation

The study is meant to understand the relationship between money supply and inflation in SubSaharan Africa (SSA). The data employed in this study covers 34 Sub-Saharan African (SSA) countries using annual data from the World Bank Development Indicators (WDI), World Bank Governance Index (WGI) and Trading Economics data bank from 1995 to 2019, a span of 24 years. Given the different monetary policy regimes in Sub-Saharan Africa, the data was separated into fixed exchange rate regime countries and non-fixed exchange rate regime countries, and I conducted a separate estimation between the two regimes to compare the different results. The model was estimated using a panel model with random effect specification based on the outcome of the Hausman test conducted. The model relates inflation as a function of money supply, real interest rate, foreign exchange rate, real GDP, government expenditure, Brent oil prices and some exogenous variables such as population growth and government effectiveness which serve as a proxy for private consumption and institutional credibility respectively. Pre-estimation analysis was also conducted to ensure we have a clear understanding of the nature and distribution of the data to identify the most appropriate estimation to have accurate and reliable findings for statistical inference. The results of our estimation indicate that money supply has the only significant effect on inflation while government expenditure, real GDP, foreign exchange rate, Brent oil prices, government effectiveness, population growth and real interest rate have an insignificant or no effect on inflation in non-fixed exchange rate regimes. On the other hand, for fixed exchange rate regimes, Real interest rates, foreign exchange rates, Brent oil prices, government expenditure, population growth and government effectiveness have a significant effect on inflation while money supply and real GDP insignificantly affect inflation.
The study recommends that non-fixed exchange rate regimes should control inflation through manipulating the money supply; On the other hand, in fixed exchange rate regimes a credibility effect may explain the lack of correlation between money supply and inflation. In order to maintain credibility, it might be appropriate to pursue an effective exchange rate policy through an efficient governance system possibly coupled with a sustainable fiscal policy addressing the problems arising from government expenditure and private consumption.