ADSU International Journal of Applied Economics, Finance and Management

Inflation And Economic Growth In Nigeria: An ARDL Analysis

Abstract

The Autoregressive distributed lag model estimate technique was used in the study to investigate how inflation affected Nigeria’s economic growth. The research used yearly time series data from 1970 to 2022 in order to produce a solid outcome. According to evidence from the estimated models, Nigeria’s economic growth is negatively impacted by inflation. Specifically, the short-term findings indicate that inflation has a substantial detrimental effect on economic growth, with an average increase of 1 percentage point in inflation resulting in a short-term decline of -0.12% in real production growth. Long-term model evidence points to a slight but negligible impact of inflation on economic growth during the studied period. Over 63% of the disequilibrium between short[1]term and long-term equilibrium is rectified annually, according to the error correction coefficient, which also indicates a speed of adjustment towards long-term equilibrium of roughly 63% each year.