Impact of inflation on economic growth in nigeria a causality test. There is the further problem of endogeneity, which has not been consciously tackled in previous studies in nigeria. This thesis investigates the effects of unemployment and inflation on economic growth in nigeria between 19862012 through the application of ordinary least square ols technique in estimating the effects of unemployment and inflation on growth, augmented dickeyfuller test and phillip. Anono abdulrahman zubairu lecturer department of management technology school of management and information technology modibbo adama university of technology,yola,adamawa state,nigeria. Impact of inflation and economic growth on unemployment in sri lanka. The unit root properties of the series were tested. The impact of monetary policy on the economic growth of. The findings also shows that there is strong relationship between inflation and economic growth in nigeria, that exchange rate has positive impact on economic. Inflation and economic growth in nigeria omoke journal of. Increase in savings leads to increase in capital formation and production activities that will lead to employment creation and reduce external borrowing of government. In doing this, the ordinary least squares method ols is used to analyse data between 1981 and 2008.
Inflation rate has no significant impact on the gdp of economic growth in nigeria. Analysis of inflation and its effect on economic growth in nigeria. Nigeria, hence the need for a greater attention to it. The effects of inflation on economic growth and on its. To achieve this objective, secondary data has been taken from central bank annual reports for the. Inflation and economic growth in nigeria omoke journal.
Limited number of studies on the responsiveness of economic growth to inflation has created a gap in knowledge. Inflation, however, was found to significantly impact on the economic growth of nigeria. The impact of unemployment and inflation on economic growth. Econometric analysis of time series data from central bank of nigeria was conducted.
Modest inflation encourages savers, enhances investment and therefore speed ups economic growth of the country. Pdf impact of inflation and monetary policy stabilization. A case study of tanzania, authorfaraji kasidi and kenani mwakanemela, year20 faraji kasidi and kenani mwakanemela published 20 economics like several other countries both industrialised and non. Like several other countries both industrialised and nonindustrialised, one of the central objectives of macroeconomic policies in tanzania is to promote economic growth and to keep inflation at a low level. Abstractcurrently, economists seem to agree that high rates of inflation cause a. Second, the rise in the aggregate level of prices must be continous for inflation to be said to have occurred. Ordinary least square method and ttest was used to test the variables most likely to impact on economic growth in nigeria due to inflation. The study set out to test for both a long run and causal relationship between external debt and economic growth in nigeria. Ultimately, we will test whether a meaningful relationship between the two variables exists in fiji. Impact of foreign trade, fdi, exchange rate and inflation. Threshold inflation, economic growth, conditional least squares, west african monetary zone, ghana, nigeria. These perceived problems are being claimed to have caused a fast decline in the economic growth of nigeria. Nigeria with the much needed capital for investment which improved economic growth. The result of the test showed that for the periods, 19702005, there was no cointegrating relationship between inflation and economic growth for nigeria data.
Abstract this paper examines the effect of inflation and economic growth on unemployment in sri lanka for the period 19902012. Motivated by this controversial, this study examined the impact of inflation on economic growth and established the existence of inflation growth relationship. Analysis of inflation and its effect on economic growth in. Recommendations are also made to help accelerate the rate of growth. The impact of fiscal and monetary policy on nigerian economic. The objectives that will guide this study are as follows. In order to have a clear understanding about relationship between inflation and economic growth from 1995 to 2010 on ssa countries, the investigator uses the following graph. It is on this basis that this study seeks to examine the impact of unemployment on economic growth in nigeria. Timeseries data for the period 1990 2011 were used to examine the impact of inflation on economic growth. Pdf it is widely believed that price stability promote longterm economic growth, whereas high inflation is inimical to growth. The cointegration test result indicated the existence of a longrun. Consequeuntly, the need to understand the relationship between inflation and economic growth of the nigerian economy become imperative and the dynamics of. The objective of this study is to examine the impact of inflation on investment and economic growth.
Their analysis was expressed using time series, which. On the other hand, zero inflation is harmful to other sectors in the economy with falling price, profit, and employment. And hence we conclude that the effect is contemporaneous. The study explored secondary data for the period of 1960 to 2012 and used eview 7. Creeping or mild inflation can be viewed as having favourable impacts on the economic growth. Impact of monetary policy of economic growth in nigeria. Jul 09, 2016 ademola, abdulsalam and badiru, abdullahi, the impact of unemployment and inflation on economic growth in nigeria 19812014 july 8, 2016. It is broadly assumed that modest and stable inflation rate stimulates economic growth of a country.
Impact of unemployment on economic growth in nigeria. Impact of unemployment on economic growth in nigeria 1980 2010. In recent years, all her efforts to grow the economy, nigerias rate of economic growth has remained very volatile and sluggish. Monetary policy and economic growth of nigeria charles onyeiwu university of lagos, lagos state, nigeria email. An analytical study of the impact of inflation on economic growth in. Motivated by this controversial, this study examined the impact of inflation on economic. The study examined the impact of inflation rate on the economic growth in nigeria. These results suggest that the threshold level of inflation above which inflation is inimical to growth is estimated at. The empirical result of the test showed that for the. The impact of inflation on unemployment in nigeria 200120. This pdf is a selection from an outofprint volume from the national bureau of economic research volume title. Ogbole, amadi, and essi 2011 wrote on fiscal policy and its impact on economic growth in nigeria 19702006. Impact of inflation rate on the economic growth in nigeria. This study investigated the impact of fiscal and monetary policy on nigerian economic growth from 1981 to 2015, with the interest in exploring which of fiscal or monetary policy has been effective in propelling economic growth in nigeria and how gdp growth responds to the monetary and fiscal policy shock.
The impact of unemployment and inflation on economic growth in nigeria 19812014. Effects of unemployment and inflation on economic growth in. The main objective of the study was to investigate the nature of relationship between inflation rate and economic growth rate. Firstly, the impact of the inflation rate on economic growth with the possibility of two threshold levels for nigeria using annual data from 1980 to 2014 was examined and secondly, nonlinearity between inflation and investment is investigated. Such problems include high unemployment rate, low investment, high rate of inflation and unstable foreign exchange rate. The study was conducted to evaluate the impact of inflation on economic growth in the context of an emerging market using empirical evidence from nigeria. Generally, both fiscal and monetary policies seek at achieving relative macroeconomic stability through maintaining stable prices or low and stable inflation. Abstract this paper investigates the impact of inflation on economic growth and development in nigeria between 1970.
Inflation and economic growth in nigeria central bank of nigeria. To study the relationship between unemployment and economic growth in nigeria. The study set three major objectives which include determine the relationship between economic growth, inflation and unemployment. Inflation does not impact significantly on economic growth in nigeria. Impact of monetary policy on economic growth in nigeria. And since there exists a positive relationship between inflation and economic growth in nigeria, the.
This essay has examined both the positive and negative effects of economic growth on society. Impact of inflation on economic growth in nigeria a causality test the study was conducted to evaluate the impact of inflation on economic growth in the context of an emerging market using empirical evidence from nigeria. Given the major distortions caused by it in the economic growth of the country and the living standard of the citizenry, various administrations in nigeria in the past and present had adopted various measures to deal with inflation in the country without achieving the desired goal. However, much less agreement exists about the precise relationship between inflation and economic performance, and the mechanism by which inflation affects economic activity. In a nutshell, the aims of monetary policy are basically to control inflation, maintain a healthy balance of payments position for the country inorder to safeguard the external value of the national currency and promote an adequate and sustainable level of economic growth and development. However, the major impact of the increase in budget deficit was felt in 1993, with high rate of inflation which shows an evidence of a positive relationship between budget deficit and inflation in nigeria, although other macroeconomic factors could have accounted for this. Economic growth is a major field of study, due to the significant impact it has on the society in general, as well as the various units that make up the society. Inflation rate has significant impact on the gdp of economic growth in nigeria. Macroeconomic determinants of economic growth in nigeria. Background of the study the word inflation rings a bell in the market economics of the world. Impact of inflation on economic growth of nigeria 2011q1 2015q3 also available for 1981 20 project proposal. The aim of this study is to examine the impact of inflation on economic growth in sri lanka for the period of 1988 2015 using the framework of johansen cointegration test and. Freund and bolaky 2008, point out to positive effect of trade openness on economic growth using panel data analysis form more than 100 countries.
The impact of rapid inflation growth has led the federal government of nigeria to adopt several sexual measures of inflation control. The impact of monetary policy on the economic growth of nigeria. Using time series data spanning forty one years 19702011 which was obtained from the central bank of nigeria cbn statistical bulletin volume 22, and central bank of nigeria. Inflation and its effect on economic growth has been a primary concern of policy makers the world over. The effect of inflation and interest rate on economy growth in nigeria is quite a serious problem. International journal of business and economic sciences applied research, 4755. The relationship between trade openness and economic growth. Anono abdulrahman zubairu lecturer department of management technology school of management and information technology modibbo adama university of technology,yola,adamawa state, nigeria. Interest rate has no significant impact on the gdp of the economic growth in nigeria. Nigeria economic outlook top 10 themes for 2019 nigeria not among the fastest growing economies in subsaharan africa ssa by percentage growth in gdp. Paramount among these measures are monetary and credit policies formulated restore balance of payment to a health. The existence and link between inflation and economic growth continue to be a subject of considerable interest and debate.
Impact of inflation on economic growth in sri lanka. The impact of unemployment on economic growth in china. An analytical study of the impact of inflation on economic. The study involves comparative analysis of the impact of fiscal policy on economic growth in nigeria during regulation and deregulation periods. The study investigated the impact of external debt on economic growth in nigeria for the period 19802012. This study therefore examines the major economic growth determinants as well as the direction of causality that exists between economic growth and some selected economic growth indicators in nigeria, employing the johansen cointegration and granger causality tests. The results showed that at low levels, inflation does not hurt economic growth, while at higher levels, inflation reduces economic growth. Does unemployment significantly impact on economic. Impact of unemployment on economic growth in nigeria 1980 2010 hauwa buba jajere.
The study made use of secondary data sourced from the central bank of nigeria cbn statistical bulletin and the national. Effect of inflation on the growth and development of the nigerian. The result of the test showed that for the periods, 19702005, there was no co integrating relationship between inflation and economic growth for nigeria data. The study will examine the impact of interest rate as one of the main variables that affects economic growth in nigeria jelilov, gylych.
Pdf threshold effect of inflation on economic growth in nigeria. Impact of interest rate on economic growth in nigeria. In the light of this, this study empirically investigates the impact of inflation and. The country experiences on inflation is no longer the problem but the fact that inflation problem seems to have reached the crisis dimension. Time series data on external debt stock and external debt service was used to capture external debt burden. Changes in interest rate determines the rate of inflation. International journal of business and economic sciences applied research, 91. The quest for economic growth and development compelled nigeria to acquire external debt. The effects of inflation on economic growth and on its macroeconomic determinants. Objective of the study the broad objective of this study is to examine the effect of unemployment on economic growth in nigeria. This study analysed the long run relationship between economic growth, foreign direct investment, foreign trade, inflation, exchange rate, imports and exports for the period of 19802011 using annual time series analysis.
However, there has been substantial debate on whether inflation promotes or harms economic growth. The objective of this paper is to analyse the impact of inflation on economic growth in nigeria for the period 1970 to 2016. This again does not signal inflation unless the price adjustment in the basket is such that the aggregate price level is induced to rise. Impact of inflation on economic growth in nigeria a. Promoting economic growth in nigeria using time series analysis believed that the impact of monetary policy could be analyzed in terms of the behaviours of the intermediate targets of consumer price index and inflation rate in promoting economic growth in nigeria. This study is on inflation rate and economic growth in nigeria between the period 1980 and 20. The results show that there exists a statistically significant positive relationship between inflation and economic growth in nigeria. A case study of tanzania, authorfaraji kasidi and kenani mwakanemela, year20 faraji kasidi and kenani mwakanemela published 20 economics like. Further effort was made to check the causality relationship that exists between the two variables by employing the vargranger causality at two different lag periods. The effects of inflation on economic growth and on its macroeconomic determinants muhammad khan to cite this version. The right level of economic growth, and thus the right level of inflation, some were in the middle. Impact of inflation and economic growth on unemployment in. In addition, the impact of fdi on economic growth is more contentious in empirical than theoretical studies, hence the need to examine the relationship between fdi and growth in different economic dispensations.
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