EFFECT OF INFLATION ON ECONOMIC GROWTH IN NIGERIA
Salihu Hayatudeen Zummo and Wamanyi Wadasheri
Volume 9 Issue 3
Abstract
The study analysed the effect of inflation on economic growth in Nigeria between 1980-2022. The study employed five (5) macroeconomic variables; economic growth, inflation, core inflation, interest rate and exchange rates. The annual time series data for the variables were obtained from Central Bank Statistical Bulletin. The study made used of descriptive statistics, econometric analytical methods. Using the Auto Regressive Distributed Lag Model (ARDL), specific goals 1, 2 and 3 were achieved. The unit root test was estimated to determine the time series of variables included in the study using both the Augmented Dickey-Fuller (ADF) and the Phillip and Perron (PP) test before the ARDL test was conducted. The outcomes of the ADF and PP revealed all the variables that were not stationary in level form, leading to the first difference test. After the variables had been determined to be stationary at level or first difference. The ARDL models ' lag order was predicted using VAR lag order selection criteria that picked lag 2 for the three ARDL models. The cointegration relationship between the variables was determined in each ARDL model using the bound sample strategy after the lag length was selected, which means that there is a long-term connection between the variables. The research then proceeded to assess the long-term and short-term connection between factors using ARDL. The investigation shows no significance for the effect of inflation, core inflation and interest rate but exchange rate shows positively significant effect to economic growth. The study recommends that, it is not a necessary condition for encouraging economic growth to imply that controlling inflation and retaining or raising the interest rate and exchange rate. Key words: Economic growth, Inflation and Determinant of Economic Growth
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