INFLATION AND UNEMPLOYMENT NEXUS IN NIGERIA: ANOTHER TEST OF THE PHILLIP’S CURVE
Journal Title: Asian Economic and Financial Review - Year 2015, Vol 5, Issue 5
Abstract
This research work examines the inflation and unemployment nexus in Nigeria by testing if the original Phillips curve proposition holds for Nigeria. The study adopted a distributed lag model with data covering the period 1970-2011. The consumer?s price index (a measure of inflation rate), was regressed on unemployment rate, growth rate of money supply, budget deficit, real gross domestic product, interest rate and the lag of current interest rate. The result reveals that unemployment is a significant determinant of inflation and that there is a positive relationship between inflation and unemployment rate in Nigeria. This finding invalidates the original proposition on the Phillips curve hypothesis in Nigeria. The study therefore recommends that the economy should be diversified and appropriate policies should be put in place by Government and the monetary authorities in order to curb the menace of inflation and unemployment and consequently reduce the problem of stagflation in Nigeria. Again, there is a need for strong institutional collaboration in dealing with these two macroeconomic variables; unemployment and inflation as have been recommended in the paper.
Authors and Affiliations
Anthony Orji*| Department of Economics, University of Nigeria, Nsukka, Nigeria, Onyinye . I. Anthony-Orji| C/o Department of Economics, University of Nigeria, Nsukka, Nigeria, Joan C. Okafor| Department of Business Administration and Management, Abia State Polytechnic Aba, Nigeria
Keywords
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