AN EMPIRICAL REVIEW OF EXCHANGE RATE REGIMES AND MACROECONOMIC PERFORMANCE IN SUB-SAHARAN AFRICA

Abstract

This study provides a systematic empirical review of the impact of exchange rate regimes on macroeconomic performance in Sub-Saharan Africa. The research analyses fixed, floating and managed float regimes as independent variables affecting macroeconomic performance. A systematic literature review methodology was employed, analysing 48 empirical studies published between 2000 and 2023 from peer-reviewed journals and institutional reports. The analysis employed multiple regression techniques to synthesise findings across studies. Results revealed that fixed exchange rate regimes show significant positive effects on inflation control but insignificant negative effects on economic growth in SSA economies. Floating exchange rate regimes demonstrated significant positive effects on shock absorption but insignificant negative effects on inflation control. Managed float regimes showed significant positive effects on both economic growth and external sector stability. The study concludes that managed float regimes provide the most balanced approach to macroeconomic management in SSA contexts, though institutional quality mediates all regime effectiveness. This underscores the critical role of regime appropriateness and institutional capacity in enhancing macroeconomic performance.