Causality Dynamics between Money Supply and Inflation in Nigeria: A Toda-Yamamoto Test and Error Correction Analysis
Journal Title: Journal of Empirical Economics - Year 2014, Vol 3, Issue 2
Abstract
This paper examines the dynamics between money supply and inflation in Nigeria using the TodaYamamoto causality test and the error correction methodology from the period of 1980-2012. Causality is found to run from money stock to output and inflation within the confines of the Nigerian economy. The estimated inflation elasticity of money stock is 1.002. Accordingly, increase in money supply is proportionately matched by the increase in inflation rate in Nigeria. Therefore, the study concludes that inflation is a purely monetary phenomenon in Nigeria as the coefficient of broad money supply is equals unity.
Authors and Affiliations
Umoru David, Tizhe N. Ann
Keywords
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