Abstract
This research work investigates the relationship between inflation, unemployment and economic growth in Nigeria (1980-2014). The objectives of the study is to examine the short run and the long run relationship between inflation, unemployment and economic growth in Nigeria. It begins with the application of Augmented Dickey-Fuller techniques to examine the unit root property of the time series data after which Autoregressive Distributive Lag Model (ARDL) was used to determine the cointegration or long-run relationship. Lastly, Vector Autoregressive (VAR) model test was conducted to investigate the causal relationship between the variables studied. Empirical findings from ARDL model shows that there is no short and the long run relationship between unemployment rate, inflation rate and real GDP growth rate in Nigeria. The results of VAR model do not indicate robust evidence and do not confirm an inverse linkage between unemployment rate and economic growth. In view of the foregoing, the study therefore recommends the adoption of fiscal measures that enhance economic growth and private sector activities, hence promoting economic growth and employment generation. In addition, key economic incentives are needed towards attracting foreign direct investment (FDI) in productive sectors of the national economy and expanding resource utilization base.
Highlights
The results shown no causal relationship between unemployment and inflation in Jordan during the study period which means there is no trade-off relationship between the two variables
At 5 percent significance level, if the probability value of a particular explanatory variable is less than 5 percent, it means that the explanatory variable has significance impact on the dependent variable for the t-statistics
OF FINDINGS The Augmented Dickey-Fuller (ADF) test revealed that real Gross Domestic Product (GDP) growth rate is stationary at level {I(0)}, while unemployment rate and inflation rate are both stationary after first difference {I(1)}
Summary
The broad objective of this study is to empirically investigate the relationship between inflation, unemployment and economic growth in Nigeria. Other objectives of the study are: 1) To examine the short run causal relationship between inflation, unemployment and economic growth in Nigeria. 2) To examine whether there is long run relationship between inflation, unemployment and economic growth in Nigeria. 3) To examine whether economic growth has impact on unemployment in Nigeria
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