Following a global vector autoregressive (GVAR) approach, this paper presents new evidence on the validity of international transmission of economic shocks from key trading partners as sources of macroeconomic fluctuations in sub‐Saharan African (SSA) countries. The GVAR model was estimated for 21 SSA countries grouped into three country classes—oil‐rich, other‐resources‐rich and non‐resource‐based economies, to account for output shocks from crucial trading partner countries—United States, United Kingdom, China and Europe. Furthermore, the generalized forecast error variance decompositions results reveal that output shocks from key trading partners constitute significant contributors to changes in key macroeconomic indicators—real gross domestic product, inflation, exchange rate and short‐term interest rate, in the SSA region. The generalized impulse response functions indicate that these economic shocks have more significant impacts on oil‐rich countries than on other country groups. A key recommendation from this study is that SSA countries, especially the resource‐rich economies, need to strengthen and diversify their economic structure, including the trade basket.

Evolving inflationary pressure from the global economy, especially advanced countries and its new directional impacts on emerging economies have provided new evidence on the validity of international transmission of economic shocks from key trading partners as sources of macroeconomic fluctuations in sub-Sahara African countries. A Global Vector Autoregressive (GVAR) model was estimated for inflationary shocks from US, UK, Euro and China on the performance of macroeconomic variables in 21 SSA countries. These countries are grouped into three country classes – oil-rich, other resources-rich and non-resource based economies. This study confirmed that inflation shocks from these economies are significant in driving the macroeconomic fluctuation (Real Gross Domestic Product (rGDP), inflation, exchange rate and short-term interest rate) in the region. In addition, the spillover effects of these were also assessed while noting the divergences of impacts based on the economic structures of economies in the region. The oil-rich countries were found to be the most affected by inflationary shocks from the U.S, China, and Euro. JEL: E17, E32, F02, F62