Inflation and economic growth in Nigeria

 

Jeremiah Femi Olu¹* and Emmanuel Ogwu Idih²

 

Research Article | Published Sepember 2015

Journal of Economics and International Business Management, Vol. 3(1), pp. 20-30.

 

¹Department of Economics, Kogi State University, Anyigba, Kogi State, Nigeria.
²Department of Banking and Finance, Kogi State University, Anyigba, Kogi State, Nigeria.

 

*Corresponding author. E-mail: olujerry1@gmail.com.

 

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This study is on inflation rate and economic growth in Nigeria between the period 1980 and 2013. The main objective of the study was to investigate the nature of relationship between inflation rate and economic growth rate. The study made use of secondary data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and the National Bureau of Statistics (NBS). The Ordinary Least Square (OLS) logged multiple regression was employed with Gross Domestic Product (GDP) as the dependent variable and Inflation Rate (INFR), Exchange Rate (EXCHR), Input of Labour and Input of Capital served as the explanatory variables. Our results showed that inflation rate in line with apriori expectations had a positive relationship but non-significant with the economic growth rate. This suggested that as the GDP rises inflation also rises, suggesting that there has been no effectiveness in the monetary policies aimed at tackling or controlling inflation rate in Nigeria. We recommended that for sustainable economic growth to be achieved in Nigeria, the level of inflation should be stabilized by the monetary authorities.

 

Keywords: Inflation, economic growth, multiple regression model, monetary policy, Nigeria.