Open AccessInflationary Effect on Nigeria Economic Growth: The ARDL Bound Test Approach
Author(s) -
B. U. K. Farouk,
Ikwuoche John David,
Nathan S. Agog
Publication year - 2021
Publication title -
journal of economics, management and trade
Language(s) - English
Resource type - Journals
ISSN - 2456-9216
DOI - 10.9734/jemt/2021/v27i630349
Subject(s) - distributed lag , akaike information criterion , inflation (cosmology) , econometrics , autoregressive model , economics , value (mathematics) , short run , sign (mathematics) , statistics , mathematics , macroeconomics , physics , theoretical physics , mathematical analysis
The expectation of any country is to experience a high output but in the presence of increasing inflation such expectation becomes blurring because high inflation is a sign of a low working economic system. In this research the impact of inflation rate (InfR) on Nigeria economic growth (EcoG) is studied for the period of 1986 to 2018 using an Autoregressive Distributed Lag (ARDL) Bounds test approach to determine the co-integration existence between InfR and EcoG and determine the long run effect through the approach of Error Correction Model (ECM). The results obtained showed that an ARDL (2, 2) model was the best fitted model for the sampled data based on the smallest Akaike’s Information Criterion (AIC) value obtained. Also, it was found that InfR significantly impacted on Nigeria EcoG negatively on the long and short run dynamics with a stable estimation as portrayed by the CUSUM square chart.