INFLATION AND ECONOMIC GROWTH IN NIGERIA

Abstract

In this research, we examined the effect of inflation on output growth in Nigeria utilizing annualized data covering the period 1990 – 2023, which were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin of various issues. This study employed ex-post research design. Some preliminary tests were performed to ensure data stationarity, and also ascertain how well the series were distributed. While Augmented Dickey-Fuller (ADF) was adopted for the former, descriptive statistics explained the latter. Ordinary Least Square (OLS) technique was used to estimate the variables. Real Gross Domestic Product (RGDP) formed the dependent variable, Inflation Rate (INFR), Interest Rate, domestic investment and Exchange Rate (EXCHR) made up the independent variables. Statistical outcomes were interpreted based on a 5 percent level of significance. The regression results indicated that inflation and investment had a negative and non-significant effects on output growth (measured by RGDP), while interest rate and exchange rate had a positive effect for the period studied. We, therefore, recommend that government should adopt a sound monetary policy measure to control inflation, low interest rate to encourage domestic investment, managed float exchange rate for import dependent economy like Nigeria to improve GDP.