INFLATION, UNEMPLOYMENT AND ECONOMIC GROWTH IN NIGERIA (1980-2019)
A. Z. Adeyemi and . J K. Olowookere
Volume 7 Issue 1
Abstract
A country’s macroeconomic performance can be judged by three broad variables: inflation rate, unemployment rate and economic growth rate. This study examined impact of inflation and unemployment on economic growth in Nigeria for the period of 1980 to 2019. Secondary data obtained from Central Bank of Nigeria and World Bank was used. Augmented Dickey- Fuller and Phillips Perron were used to test stationarity of the data, while Autoregressive Distributive Lag Bound was used to investigate long run relationship among inflation, unemployment and economic growth. Long run and short run impact of inflation and unemployment on economic growth were examined using Autoregressive Distributive Lag Long Run Coefficient and Error Correction Model respectively. In addition, Granger Causality was used to determine the direction of causality of the variables. Results of the study showed that all the variables were stationary at first difference, while co integration test results revealed that variables had long run relationship. The results showed that inflation has positive and insignificant impact on Nigeria economic growth (β=0.1864, P>0.05), while unemployment has negative and insignificant impact on Nigeria economic growth (β=-0.0769, P>0.05). The Granger causality results reported that inflation cause economic growth, while unemployment does not cause economic growth in Nigeria for the period covered by the study. This study therefore recommends that government needs to establish more industries, that would generate more employment, increase productivity, spur economic growth and reduce inflation rate.
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