Does Inflationary Dynamics Impact on Nigeria’s Economic Growth?

Abstract

Background: High inflation rate is one of the economic problems facing Nigeria. As the government is unable to provide a long-term solution to this issue, inflation in the economy is inevitable. Objective: The study aimed at exploring the medium and longstanding interactions of inflationary dynamics on Nigeria’s economic growth speed. Methodology: Autoregressive Distribution Lag (ARDL) bound estimation procedure was utilised in the study. The researchers used the Augmented Dickey-fuller test (ADF) for the stationarity test on the variables. Result: The study found that inflation has a detrimental long-term and short-term influence on Nigeria’s economic growth. This demonstrates that when inflation is excessively high, an economy's currency loses buying power as a result of an increase in prices. Unique Contribution to Knowledge: The study has demonstrated the link between inflation and Nigeria’s economic growth. Conclusion: The study concluded that inflation has a severe consequence on the Nigerian economy both in medium and longstanding periods. Recommendations: Giving the study’s findings, the study recommended stringent monetary policy.

Keywords

• Inflation
• Exchange rate
• Interest rate