The results showed that at low levels, inflation does not hurt economic growth, while at higher levels. The effects of inflation on economic growth and on its macroeconomic determinants. But it is difficult to make the price rise of a creeping variety. Causes, costs, and current status congressional research service summary since the end of world war ii, the united states has experienced almost continuous inflation the general rise in the price of goods and services. Threshold effects of inflation on economic growth in. Interest rates have an influence on economic growth. The effect of inflation price instability in the growth and development of the nigerian economy cannot be overemphasized. Threshold effects of inflation on economic growth in africa. So the study will be of importance to educate nigerian s 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. The study examined the effects of financial inclusion on economic growth in nigeria from 2000 to 2018. Pdf analysis of inflation and its effect on economic growth. The impact of unemployment and inflation on economic growth. Research design and data the analysis in this study is based on time series data for nigerias inflation rate and gross domestic product which is used as a.
Nigeria inflation rate 19962020 data 20212022 forecast. A proper understanding of these concepts is therefore very necessary in order to get a good grasp of how inflation and interest rate has effected growth in nigeria over the past eleven years. Paramount among these measures are monetary and credit policies formulated restore balance of payment to a health. This paper investigates the effects of inflation on economic growth in nigeria between 1986 and 2014. The dependent variable of financial inclusion proxied by contribution of financial institutions to gross domestic product gdp was regressed on the explanatory variable of.
Threshold effect of inflation on economic growth in nigeria. The gross domestic product growth is a long term rise in the capacity to supply increasingly diverse economic goods o its population. Purpose to investigate and determine the effects of unemployment and inflation on economic performance in nigeria within the specified period as in the title and to establish the relationship between unemployment and inflation with real gross domestic product in nigeria. 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. Their analysis was expressed using time series, which. It would be difficult to find a similar period in american history before that war.
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 interest rate fluctuation on the economic. High rate of inflation acts as a disincentive to long run economic growth. 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. The study will examine the impact of interest rate as one of the main variables that affects economic growth in nigeria jelilov, gylych. The effect of inflation and interest rate on economic. Agricultural production and economic growth in nigeria. Despite the growth of the nigerian economy, poverty is still on the increase and this calls for a shift from monolithic oilbased economy to a more plural one with agriculture being the lead sector. 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. It was recommended that pro poor policies should be designed for. 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.
The issue of inflation has been a matter of concern for economists overtime as it remains a fact that the real. In this respect, the paper estimates an inflation threshold level of 22. Impact of inflation on nigeria economic growth mensch mind. Analysis of the effect of inflation, interest rates, and. Causes, effects and solution of inflation in nigeria myschool. The existence and link between inflation and economic growth continue to be a subject of considerable interest and debate. Effect of inflation on the growth and development of the. In recent years, nigeria has been experiencing growth and the condition seems right for launching unto a path of sustained and rapid growth, justifying its ranking amongst the 11 countries as identified by goldman sachs to have the potential for attaining global competitiveness based on their economic and demographic settings and the. Inflation and its effect on economic growth has been a primary concern of policy makers the world over.
The annual inflation rate in nigeria rose for the seventh straight month to 12. Ultimately, we will test whether a meaningful relationship between the two variables exists in fiji. Two research hypotheses were formulated to investigate the relationship between interest rate and economic growth and the difference in economic growth before and after interest rate deregulation regime in nigeria. Timeseries data for the period 1990 2011 were used to examine the impact of. Effects of exchange rate fluctuations on economic growth. Download the complete banking and finance project topic and material chapter 15 titled the effect of inflation and interest rate on economic growth of nigeria a case study of first bank here on projects. The impact of unemployment and inflation on economic. Inflation increases marginally, driven mainly by base effects nigeria economic outlook top 10 themes for 2019 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2015 2016 2017 2018e 2019f inflation rate yearly average headline inflation accelerates from 2018 estimate of 11.
Mild inflation has an encouraging effect on national output. The impact of unemployment on economic growth includes. Threshold inflation, economic growth, conditional least squares, west african monetary zone, ghana, nigeria. Section 5 presents and discusses the empirical results, and section 6 gives concluding remarks. Causes, effects and solution of inflation 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. However, much less agreement exists about the precise relationship between inflation and economic performance, and the mechanism by which inflation affects economic activity. Impact of inflation on nigeria economic growth 19812016. This growing capacity is said to base on advancing technology. Effects of inflation rate on economic growth in nigeria. An overview of the nigerian economic growth and development. Pdf threshold effect of inflation on economic growth in.
Inflation, economic growth and interest rate concepts that are central and interrelated in macro economic. In the case of nigeria which is used here as a spotlight in this discussion, this analysis method is used to identify and analyze the characteristics and demographiceconomic effects on a nation covering a land area of 923,768 sq. Nigeria, hence the need for a greater attention to it. Anono abdulrahman zubairu lecturer department of management technology school of management and information technology modibbo adama university of technology,yola,adamawa state,nigeria. It is on this basis that this study seeks to examine the impact of unemployment on economic growth in nigeria. 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 made use of secondary data sourced from the central bank of nigeria cbn statistical bulletin and the national. Impact of unemployment on nigeria economic growth 19812017 pdf. Archival data sourced from central bank of nigeria statistical bulletin was used for the estimation of the variables. Effects of unemployment and inflation on economic growth in. Pdf threshold effect of inflation on economic growth in nigeria.
Download the project from chapter one to five with reference. The economy never experienced doubledigit inflation during the 1960s. Impact of interest rate on economic growth in nigeria. Limited number of studies on the responsiveness of economic growth to inflation has created a gap in knowledge. A case study of tanzania faraji kasidi1 kenani mwakanemela2 abstract 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. Pdf effects of financial inclusion on economic growth in. This study is on inflation rate and economic growth in nigeria between the period 1980 and 20. The impact of rapid inflation growth has led the federal government of nigeria to adopt several sexual measures of inflation control. The main objective of the study was to investigate the nature of relationship between inflation rate and economic growth rate. Stylized facts about inflation and economic growth in africa table 1 and appendix 6 present inflation and growth experiences in africa. 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.
A proper understanding of these concepts is therefore very necessary in order to get a good grasp of how inflation and interest rate has effected growth. Ozekhome1 abstract this paper empirically examines inflation, investment and economic growth nexus in nigeria, employing the neoclassical growth model. Impact of monetary policy on economic growth in nigeria. 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. The main thrust of this study was to investigate the effect of interest rate fluctuation on the economic growth of nigeria. The existence of a threshold level above which inflation has an adverse effect on economic growth in rwanda has been investigated by means of a quadratic regression model and ordinary least squares technique.
Effects of exchange rate fluctuations on economic growth of. Impact of unemployment on economic growth of nigeria. The effects of inflation on economic growth and on its. 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 unemployment on economic growth of nigeria mensch mind. This page provides nigeria gdp annual growth rate actual values, historical data, forecast, chart, statistics, economic. However, slight dose of inflation is necessary for economic growth. Ito, isard and symasnsky 1999 found that high economic growth. Evidence from a dynamic panel threshold regression approach, working paper series n 249, african development bank, abidjan, cote divoire. 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.
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. Inflation below the first threshold affects economic growth positively but insignificantly. The dependent variable of financial inclusion proxied by contribution of financial institutions to gross domestic product gdp was regressed on the explanatory. Statement of the problem the main purpose of this study is to try to identify the impact of interest rate of economic growth. 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. The effects of inflation on economic growth and on its macroeconomic determinants muhammad khan to cite this version. The way the hyperinflation affects economic growth is summed up here. By 1998, the inflation rate had, however, reduced to 9. 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. Abstract this paper investigates the impact of inflation on economic growth and development in nigeria between 1970. Firstly, the impact of the inflation rate on economic growth with the. In the case of nigeria which is used here as a spotlight in this discussion, this analysis method is used to identify and analyze the characteristics and demographic economic effects on a nation covering a land area of 923,768 sq. By 1976, however, the inflation rate stood at 23 per cent.
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