Inflation In Nigeria Research Articles

Money Supply and Inflation in Nigeria: Implications for National Development

The study examines money supply and inflation rate in Nigeria. Secondary data that ranged between 1970-2008 were sourced from the CBN Statistical Bulletin. The study used Vector Auto Regressive (VAR) model. The stationary properties of the model were also explored. The results revealed that money supply and exchange rate were stationary at the level while oil revenue and interest rate were stationary at the first difference. Results from the causality test indicate that there exists a unidirectional causality between money supply and inflation rate as well as interest rate and inflation rate. The causality test runs from money supply to inflation, from the interest rate to inflation and from interest rate to money supply. The paper concludes that government should use the level of inflation as an operational guide in measuring the effectiveness of its monetary policy.

An Econometric Analysis of Monetary Policy and Inflation:The Nigerian Case, 1970-2006

This study argues that monetary targeting as a strategy of monetary policy is not effective in controlling inflation in Nigeria. Before arriving at this conclusion, an econometric model of the demand for money is specified and estimated using the techniques of Ordinary Least Square on an annual time series data for the period 1970-2006. This study specifically examined the nature and direction of casualty between the demand for money and its determinants. Furthermore, the stationary and co-integration techniques were adopted to examine the data in order to determine if there exists a long run relationship among the variables. More also, the full annually sample period was splitted into two sub-sample period; 1970-1992 and 1993-2006 in order to test for the stability of the regression co-efficient with the Chow-test. The choice of the sub-periods is attributed to the adoption of indirect control of monetary policy in 1993 under the auspices of the Structural Adjustment Programme. As expected, the main finding emerging in this study showed that the adoption of monetary targeting is not effective in controlling inflation in the Nigerian economy. This is apparent, since there exist an unpredictable and unstable relationship between the ultimate goal and intermediate variables as indicated by the Chow-test. These findings suggest the adoption of inflation targeting in controlling inflation in Nigeria.

Empirical Analysis Of Agricultural Production And Inflation Rate In Nigeria (1970- 2006)

Agriculture was known to be one of the major contributors to national development, but suffering from neglect has resulted to heart-aching inflation in Nigeria. Inflation in Nigeria of the recent has been attributed to high food prices. Increasing population growth has also rendered the growth in agricultural sector insignificant resulting to a little rise in output level. This study therefore analyzed the Nigerian agricultural production and inflation rate and examines their linkage and dimension. Time series data from 1970 to 2006 were employed for this study. The analytical techniques employed are descriptive statistics and Granger Causality model. The result revealed that there were variations in the trend of both inflation rate and agricultural output. The change in agricultural output (inventory change) caused inflation during the 1970-2006 period and not vice-versa. The result showed that there is direct relationship between agricultural output change and inflation rate. In addition, increase in previous year's inventory change of agricultural production increases inflation rate. Consequently, policies that can absorb the excess in agricultural output inventory thus resulting into food prices and inflation stability are recommended.Keywords: Agricultural production, Inflation, Empirical analysis, Granger Causality

An Empirical Analysis of Fiscal Deficits and Inflation in Nigeria

The relationship between fiscal deficits and inflation has provoked considerable interest in the macroeconomics literature. While the theory postulates that fiscal deficits lead to inflation, empirical research has been less conclusive about the relationship. This paper reexamines the issue in the context of a developing country, Nigeria, using data over 1970–2006, a period of persistent inflationary trends. We adopted a modeling approach that incorporates cointegration techniques and structural analysis. The results reveal a positive but insignificant relationship between inflation and fiscal deficits in Nigeria. We did not also find any strong evidence linking past levels of fiscal deficits with inflation in Nigeria during the period. Rather, we report a positive long run relationship between money supply and inflation in the Nigerian economy, suggesting that money supply is procyclical and tends to grow at a faster rate than inflation rate. Key words: Fiscal deficit; Inflation; Cointegration; Money supply; Nigeria

Long memory, structural breaks and mean shifts in the inflation rates in Nigeria

This paper deals with the analysis of the inflation rate in Nigeria. We use long range dependence techniques based on fractional integration or I(d) models, incorporating structural breaks in the model. The results indicate that inflation in Nigeria displays long memory behaviour, with an order of integration of about 0.3 in spite of the existence of breaks at different periods. Including the growth rate of money (M1) as an exogenous term, the results indicate that this variable significantly affects inflation, two and three periods (quarters) after the initial shock. Key words: Inflation rate, long memory, structural breaks, mean shifts, money supply.

Cashless Society: An Implication To Conomic Growth & Development In Igeria

The Central Bank of Nigeria (CBN) announced a new cash policy (Cashless Society), which began on 1st of January 2012 in Lagos state. The policy will be effective nationwide from June 1st 2012. The various technologies and issues involved in cashless society are discussed. This research work sampled the opinions of the general public on issues surrounding the Cashless Society by using structured questionnaire to gather information from people. Data obtained was tabulated and the result was analyzed using percentages. The analyzed result was presented graphically and it was discovered that larger percentage of sampled population are of the opinion that Cashless Society will proffer solution to high risk of cash related crimes such as illegal immigration, financing Terrorism, illegal drug Trade, Human Trafficking, corruption etc. It will enhance effectiveness of monetary policy in managing inflation in Nigeria, thereby improving economic growth and development. Various issues such as benefits and social implication of Cashless Society are discussed. We proposed a Model Cashless System for Nigeria, which will be more convenient for people toappreciate, embrace, and use.

Inflation accounting and control through monetary policy measures in Nigeria: Multi-regression analysis (1973-2010)

This study was carried out to evaluate Inflation accounting and control through monetary policy measures in Nigeria from 1973 to 2010. Secondary data were used empirically to do the assessment. Aggregate data on independent variables (monetary policy measures) that affect inflation were collected and analyzed using multiple regression model and the ordinary least squares estimation techniques. From the analysis carried out, it was found that some of the variables (money supply, interest rate and exchange rate) were statistically significant, which means that the studied variable could be used to predict inflation. Furthermore, domestic credit was not statistically significant, even though it could be used as a policy variable to account for inflation. Based on these findings, it was recommended that monetary supply, interest rates and exchange rates should be the principal policy variables to be manipulated in controlling inflation in Nigeria. I. Background of the study Inflation is a serious macroeconomic problem and it is an aspect of macroeconomic instability. It can make a comparison of economic conditions at different point in time quite difficult, creates complications for economic measurement, and brings uncertainty when we try to look into the future. Inflation is a substantial and sustained increase in general price level leading to disequilibrium thus undermining the ability of money to serve as a tool for market coordination. In Nigeria, monetary policy measures are used to control inflation and other macro-economic variables in order to ensure economic stability. Monetary policy involves measures designed to regulate and control the volume, cost, availability and direction of money and credit in an economy to achieve some specific macroeconomic policy objectives (Anyanwu, and Oackhenan, 1995).

An Empirical Analysis of Bank Lending and Inflation in Nigeria

An Empirical Analysis of Bank Lending and Inflation in Nigeria

A dynamic macroeconomic model of the Nigerian economy with emphasis on the monetary sector

The dynamic nexus between money supply, fiscal deficit, inflation, output and exchange rate management has recently generated much debate in economic literature in Nigeria. To contribute to this debate, this paper uses the co-integration and error correction framework of analysis and also conducts policy simulation experiments to investigate how monetary variables interact with aggregate supply, demand and prices in order to aid stabilization policies. The results show that monetary variables and government finance are linked through government’s net indebtedness to the banking system. The simulation results show that a 20 per cent monetary squeeze would reduce the inflation rate faster than if the reduction in money supply were 10 per cent. This reduction in money supply would also lead to a reduction in output, employment and government expenditure, which may hurt the domestic economy. The paper thus concludes that there is a trade-off between higher GDP growth and inflation in Nigeria.

Monetary Policy, Bank Lending and Inflation in Nigeria, 1993-2009

Monetary Policy, Bank Lending and Inflation in Nigeria, 1993-2009

Inflationary pressure in Nigeria: the structuralists’ approach

Opinions differ on the right solutions to inflation in Nigeria. This is due mainly to the fact that while a school of thought sees inflation as a fundamental monetary phenomenon, another school sees it as structural. This paper examined the structural aspect. Structural factors in Nigeria as principal causes of inflation were identified. These structural factors were grouped together under budget deficits, external reserves, and the level of the Nigerian economy (represented by the GDP). Using data on these variables for 32 years (1977 - 2008), and analyzing them with Co- integration and Error Correction Model (ECM), it was found that inflation is 77% affected by structural variables and that the Nigerian economy, as expected, is negatively correlated to inflation while budget deficits and external reserves are positively correlated. All the variables are significant at 5% significant level. The policy implication of the finding is that the supply management of curbing inflation cannot be ignored in tackling inflation in Nigeria. Key words: Inflation Structural Fundamental Budget deficit External reserves GDP

Monetary policy and macroeconomic management: A simulation experiment

The dynamic nexus between money supply, fiscal deficit, inflation, output and exchange rate management has generated much debate in economic literature in Nigeria in recent times. To contribute to this debate, this paper uses 3SLS estimation technique as well as carried out policy simulation experiment to investigate how monetary variables interact with aggregate supply, demand and prices in order to aid stabilization policies. The results show that monetary variables and government finance is linked through the government’s net indebtedness to the banking system. The simulation results show that a 20 percent monetary squeeze would reduce inflation rate faster than if the reduction in money supply were 10 percent. This reduction in money supply also leads to a reduction in output, employment and government and government expenditure, which may hurt the domestic economy. Thus, the study concludes that there is a trade off between higher GDP growth and inflation in Nigeria.

Stochastic modelling inflation in Nigeria

Stochastic modelling inflation in Nigeria

Monetary aggregate targeting and inflation in Nigeria

In a capitalist economy, monetary aggregate policy instruments are normally employed by monetary authorities. This attempt is to achieve counter cyclical policy objectives like the level of inflation, a reasonable level of price stability, an equitable distribution of income and wealth, a favourable balance of payments and acceptable rate of economic growth and development among others. To the financial analysts, if the direction of the volume of money supply into a given economy and the velocity and output of good and services remain constant, there is bound to be an impact on prices. The significant role of monetary aggregates in tackling the problem of inflation in any economy can not be under estimated. However, the continued over reliance on the use of monetary aggregates in addressing the issue of inflation in Nigeria is the main thrust of this paper which posits that rewarding answers to the problem of inflation in Nigeria is a joint efforts of monetarists and fiscal analysts. It further examines how money supplied can be used as an intermediate target variable to face the governments monetary recklessness. Keywords: Inflation, Monetary Management and Central Bank Agrosearch Vol. 8(1&2) 2006: pp. 81-93

DOES MONEY TELL US ANYTHING ABOUT INFLATION IN NIGERIA?

This paper seeks to establish whether or not monetary aggregates M1 and M2 have useful information for forecasting inflation, other than that provided by inflation itself. The study is approached in two ways. First, it conducts forecasting experiments, using mean absolute percentage errors (MAPEs). It then evaluates whether each monetary variable improves the forecasts of a simple autoregressive (AR) (1) model of inflation or not. The study reveals that the MAPEs for all the variables are less than that of the benchmark AR (1) model. This implies that all the variables examined serve as important information variables for price movements. Also, from the inflation equation, the paper reveals that monetary aggregate (M2), Treasury bill rate, deposit rate and exchange rates are significant in the equation, therefore concluding that these variables provide useful information in predicting inflation in Nigeria.

Price Stabilization in the Nigerian Economy: An Assessment of the Role of Fiscal and Monetary Policy Instruments

Essentially, this study assesses the effectiveness of monetary and fiscal policy instruments as employed in controlling the problem of inflation in Nigeria. Specifically, a ten year period was used to measure the extent to which the dependent variable (i.e., inflation measured by composite consumer price index) is determined or control by the independent variable(s) (i.e., money supply for monetary policy on the one hand and on the other hand government expenditure and taxes for fiscal policy). It is the conclusion of the paper that, in Nigeria, it is not only the instruments of monetary and fiscal policy that determines the rate of inflation, but there are other factors that contribute immensely to the persistent rise in the prices of goods and services in the country. The paper further recommends that, there is the need for the fiscal and monetary policy to be deliberately harmonized, coordinated and integrated to move the counter productive conflict that absence of this effort could bring. In situation where the monetary authority is made to finance fiscal deficit that are below market rate of interest undermines the efficacy of monetary policy and underscores lack of pursuit of common goals among the relevant organs of government. Furthermore, the financial system in the country should be strengthened and improved upon in depth as well as in scope. Economic surveillance and intelligent capabilities need to be substantially improved, especially, in the area of high-tech information and communication systems. This will ensure availability of up to date, relevant and timely information at all times.

Money, Output and Price Level in Nigeria: A Test of the Monetary Neutrality Proposition

This paper presents and tests a model to determine either or both how anticipated or unanticipated money affects real output and inflation in Nigeria. The Barro two –step estimation procedure was explored. Also, the effects of devaluation and business cycles in the industrialized countries on output fluctuation in Nigeria were pursued. The evidence reveals that while anticipated money affects real output, the unanticipated money did not. Thus, the tests contract the policy ineffectiveness proposition. Also, cyclical movements in the output of industrialized countries negatively affect real output with spread effect; and devaluation exhibits a delayed positive impact on output performance, with greater effect on inflation. (Af. J. of Finance and Management: 2003 11(2): 110-120)

The Main Determinants of Inflation in Nigeria

This paper analyzes the dominant factors influencing inflation in Nigeria. An error correction model of the inflation process is developed based on money market equilibrium conditions. The results of this analysis confirm the basic findings of earlier studies, namely, that monetary expansion, driven mainly by expansionary fiscal policies, explains to a large degree the inflationary process in Nigeria. Other important factors are the devaluation of the naira and agroclimatic conditions. It was found that concurrent fiscal and monetary policies had a major influence on the impact of the depreciation of the naira on inflation.

The Main Determinants of Inflation in Nigeria

This paper provides a selective review of the literature on the determinants of inflation in Nigeria, analyzes the dominant factors influencing inflation, presents the empirical results of a reduced-form elasticities model, and discusses the policy implications of the empirical results. The results of this analysis confirm the basic findings of earlier studies, namely that monetary expansion, driven mainly by expansionary fiscal policies, explains to a large degree the inflationary process in Nigeria. Other important factors are the devaluation of the naira and agroclimatic conditions. With respect to the depreciation of the naira, it was found that concurrent fiscal and monetary policies had a major influence on its impact on inflation. Given the considerable role of food commodities in the CPI, agroclimatic conditions (rainfall) were found to play a significant role in overall movements in prices and should be fully taken into consideration in any analysis of the inflationary process in Nigeria.

The Political Economy of Nigeria edited by I. William Zartman New York, Praeger, 1983. Pp. vii + 283. $30.95. $13.95 paperback. - Inflation in Nigeria edited by H. M. A. Onitiri and Keziah Awosika Ibadan, Nigerian Institute of Social and Economic Research, 1982. Pp. xii + 390. $36.25.

The Political Economy of Nigeria edited by I. William Zartman New York, Praeger, 1983. Pp. vii + 283. $30.95. $13.95 paperback. - Inflation in Nigeria edited by H. M. A. Onitiri and Keziah Awosika Ibadan, Nigerian Institute of Social and Economic Research, 1982. Pp. xii + 390. $36.25.