Nigerias yearonyear headline inflation entered into the doubledigit range in february. Analysis of the effect of inflation, interest rates, and exchange rates on gross domestic product gdp in indonesia. Aug 19, 2019 the effect of inflation on debtors is positive because debtors can pay their debts with money that is less valuable. The results showed that at low levels, inflation does not hurt economic growth, while at higher levels, inflation reduces economic growth.
There is a general consensus that high inflation r ates and interest rate cause problems for aggregate. The result shows that inflation has a positive and an insignificant impact on the economic growth while unemployment has a negative and an insignificant impact on the economic growth in nigeria in. Economic growth can be defined as the increase in the inflation adjusted market value of the goods and services produced by an economy over time. This page provides nigeria inflation rate actual values, historical data, forecast, chart, statistics, economic calendar and news.
The importance, effect, causes, relationship, comparison, history, role, solutions are discussed. It was the highest inflation rate since april of 2018, largely driven by the effects of the border closure and the new vat tax rate. To achieve this objective, secondary data has been taken from central bank annual reports for the. The economy never experienced doubledigit inflation during the 1960s. 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 work covered a period of 19812009 using an annual data from central bank of nigeria statistical bulletin. Threshold inflation, economic growth, conditional least squares, west african monetary zone, ghana, nigeria. Analysis of the effect of inflation, interest rates, and. Inflation and its effect on economic growth has been a primary concern of policy makers the world over. How inflation and interest rates are related to economic.
Threshold effects in the relationship between inflation. The impact of rapid inflation growth has led the federal government of nigeria to adopt several sexual measures of inflation control. Ascertain the effect of monetary policy on cooperant factors in economic growth in nigeria. Impact of unemployment on economic growth in nigeria 1980 2010.
Interest rates have an influence on economic growth. 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. Threshold effects of inflation on economic growth in africa. Analysis of inflation and its effect on economic growth in. Nigeria s yearonyear headline inflation entered into the doubledigit range in february. Consumer price index cpi was used as a proxy for inflation and the gdp as a perfect proxy for. Structural analysis attempts to recognize how economic phenomena and finding the root of the permanent disease and destruction such as inflation that evaluates lawful relationship between the phenomena. Timeseries data for the period 1990 2011 were used to examine the impact of inflation on economic growth. A growth model via the ordinary least square method was used to ascertain the relationship between fdi and economic growth in nigeria. Impact of interest rate on economic growth in nigeria.
Get free research paper on impact of inflation on government spending on nigeria economy 1981 20 project topics and materials in nigeria. This paper investigates the effects of inflation on economic growth in nigeria between 1986 and 2014. And since there exists a positive relationship between inflation and economic growth in nigeria, the bad era of double digit inflation rate could be effectively utilized by the nigeria government to erode the countrys debt burden. This paper utilized a quarterly time series data for.
Effect of inflation on the growth and development of the nigerian. The issue of inflation has been a matter of concern for economists overtime as it remains a fact that the real. Apart from ghana, south africa and nigeria currently pursuing an inflationtargeting regime, most of the rest of african countries pursue a monetary targeting. Motivated by this controversial, this study examined the impact of inflation on economic growth and established the existence of inflation growth relationship. Ito, isard and symasnsky 1999 found that high economic growth. So the study will be of importance to educate nigerians by revealing to them that one of the major reason why nigeria economy is growing very slow could be trace back to inflation and interest rate problem. To discuss the factors affecting unemployment and economic growth in nigeria. Max and mark 2008 examined the effect of inflation on growth using panel of transition countries. Threshold effects of inflation on economic growth in. Impact of unemployment on economic growth in nigeria.
Using a structural vector auto regression svar model, the paper explores the relationships between the monetary policy rate interest rate, growth rate of money supply, inflation, exchange rate growth and growth rate of output. Inflation and economic growth in nigeria central bank of nigeria. Abstract this paper examines the effect of inflation and economic growth on unemployment in sri lanka for the period 19902012. Ultimately, we will test whether a meaningful relationship between the two variables exists in fiji. 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. The effect of inflation and interest rate on economic growth of nigeria includes abstract and chapter one, complete project material available the effect of inflation and interest rate on economic growth of nigeriaabstractthe gross domestic product growth is a long term rise in the capacity to supply increasingly diverse economic goods o its population.
Threshold effect of inflation on economic growth in nigeria sani bawa 1 and ismaila s. The existence and link between inflation and economic growth continue to be a subject of considerable interest and debate. Therefore, it is our aim in this study to test whether rise in price has had positive or negative effect on economic growth in nigeria. Impact of inflation on economic growth in nigeria a causality test. Impact of foreign direct investment on nigeria economic. Pdf threshold effect of inflation on economic growth in nigeria. Impact of unemployment on economic growth of nigeria mensch mind. Threshold effect of inflation on economic growth in nigeria. A dynamic panel threshold analysis for asian economies.
The study involves comparative analysis of the impact of fiscal policy on economic growth in nigeria during regulation and deregulation periods. It is conventionally measured as the percent rate of increase in real gross domestic product, or real gdp. Paramount among these measures are monetary and credit policies formulated restore balance of payment to a health. Index used as proxy for inflation, gxp is government spending, eop is economic openness eop which is proxied by the ratio of total exports and imports to gdp and trn is lagged trend. Effect of inflation on the growth and development of the. Impact of unemployment on nigeria economic growth 19812017 pdf.
The reason for this exercise is nigeria has been under pressure from the international lending agencies such as imf and world bank to reduce the inflation rates in order to boost economic growth. The gross domestic product growth is a long term rise in the capacity to supply increasingly diverse economic goods o its population. Effects of inflation rate on economic growth in nigeria 1986. The effect of inflation and interest r ate on economic growth in nigeria is a serious malady. Doguwa1 this paper reexamines the issue of the existence and the level of inflation threshold in the relationship between inflation and growth in nigeria, using three different approaches that provide appropriate procedures for estimating the threshold level.
Conceptual framework the concept of inflation has been define as a persistence rise in the general price level of broad spectrum of goods and services in a country over a long period of time. Threshold effects of inflation on economic growth in africa african. Effects of inflation rate on economic growth in nigeria. Nigeria, hence the need for a greater attention to it. 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. Effects of exchange rate fluctuations on economic growth. The broad objective of this study is to examine the effect of unemployment on economic growth in nigeria. An analytical study of the impact of inflation on economic growth in.
Impact of inflation on nigeria economic growth 19812016. Measuring the economic growth of a country aims to assess whether the growth can cope with the growing demands of the society. By 1998, the inflation rate had, however, reduced to 9. Pdf inflation, interest rates and economic growth in nigeria. It was established that the variables inflation rate and gdp.
Pdf threshold effect of inflation on economic growth in. Inflow of remittances the result of the trend analysis showing the flow of international remittances to nigeria from 1980 2009 is. And hence we conclude that the effect is contemporaneous. Econometric analysis of time series data from central bank of nigeria was conducted. This paper examined the effect of inflation on economic growth in nigeria utilizing annualized data covering the period 1986 2015, which were obtained from the central bank of nigeria cbn statistical bulletin of various issues.
Monetary policy cooperant factors do not have significant impact on economic growth in nigeria. Nigeria inflation rate 19962020 data 20212022 forecast. Inflation and economic growth in nigeria omoke journal of. Pdf analysis of inflation and its effect on economic growth. 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. The effect of inflation on debtors is positive because debtors can pay their debts with money that is less valuable. Economic growth can be defined as the increase in the inflationadjusted market value of the goods and services produced by an economy over time. 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. This study is designed to examine the impact of interest rate on nigeria. The negative relationship between economic growth and inflation is in line with the finding of ferdinand and isadora 2014, and inyiama 20. Impact of inflation and economic growth on unemployment in. Download the project from chapter one to five with reference. Effects of unemployment and inflation on economic growth in.
Section 5 presents and discusses the empirical results, and section 6 gives concluding remarks. The impact of unemployment on economic growth includes. The effect of inflation price instability in the growth and development of the nigerian economy cannot be overemphasized. The country experiences on inflation is no longer the problem but the fact that inflation problem seems to have reached the crisis dimension.
Analysis of inflation and its effect on economic growth in nigeria. The results show that there exists a statistically significant positive relationship between inflation and economic growth in nigeria. This paper investigates the impact of inflation on economic growth and development in nigeria between 19702010 through the application of augmented dickeyfuller technique in testing the unit root property of the series and granger causality test of causation between gdp and inflation. Hence, the effects of various macroeconomic shocks depend on the exchange rate policy adopted by the country, it is therefore important to investigate the effects of exchange rate fluctuations on the nigeria economic growth and also the factors that influence exchange rate in nigeria. Inflation is a social malady as well as a pervasive economic process whose effects are felt by all and sundry in all sectors of the economy. Pdf it is widely believed that price stability promote longterm economic growth, whereas high inflation is inimical to growth. Based on inflationary perspective, our state of nation has been captured thus. The augmented dickeyfuller technique was adopted to test the unit root property of the series while granger causality was used to test the causation between. This growing capacity is said to base on advancing technology. The effect of inflation and interest rate on economy growth in nigeria is quite a serious problem. The study recommended that government should adopt tight monetary policy measures to stabilize tide of inflationary pressures on our economy. An analytical study of the impact of inflation on economic. Impact of unemployment on economic growth of nigeria.
Effects of unemployment and inflation on economic growth. To study the relationship between unemployment and economic growth in nigeria. It is conventionally measured as the percent rate of increase in real gross domestic product, or real gdp growth is usually calculated in real terms i. The objectives that will guide this study are as follows. This is approved for students in accountancy, business, computer science, economics, engineering, arts. Consequeuntly, the need to understand the relationship between inflation and economic growth of the nigerian economy become imperative and the dynamics of. The results of unit root suggest that all the variables in the model are stationary and the results of. These results suggest that the threshold level of inflation above which inflation is inimical to growth is estimated at. The adverse effect of external debt and economic growth related problems on the nigeria economy are becoming unbearable. The findings also shows that there is strong relationship between inflation and economic growth in nigeria, that exchange rate has positive impact on economic. Impact of inflation on nigeria economic growth mensch mind.
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