Abstract

This paper examined the effect of inflation on economic growth in Nigeria utilizing annualized data covering the period 2011 – 2020, which were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin of various issues. This study employed ex-post research design because the variables were based on events that had already taken place, which the researcher could neither control nor manipulate. Therefore, the main purpose of this study is to ascertain the existence of a relationship between inflation and economic growth in Nigeria. The methodology employed in this study is the quantitative research design. Consumer price index (CPI) was used as a proxy for inflation and the GDP as proxy for economic growth, to examine the relationship. The scope of the study spanned from 2011 to 2020. Ordinary least square method and t-test was used to test the variables most likely to impact on economic growth in Nigeria due to inflation. The findings also show that there is strong relationship between inflation and economic growth in Nigeria, that exchange rate has positive impact on economic growth and that high interest rate discourages investment and hence forestalls economic growth. It is therefore, recommended that the monetary policies aimed at exchange rate be strengthened through effective supervision and regulatory framework of financial system by the monetary framework of financial system by the monetary authorities. Continuous monetary policies that will achieve the desired macroeconomic stability, increase in private sector credits and there is also need from more effective management of interest rate in Nigeria.

Click here to download full paper