The Effectiveness of Inflation Control on Economic Growth in Nigeria


There appears to be a consensus that macroeconomic stability defined as low inflation is negatively related to economic growth. Hence, rapid output growth and low inflation are the most common objectives of macro-economic policy. Some scholars concurs that inflation may also reduce a country’s international competitiveness, by making its exports relatively more expensive, thus impaction negatively on the balance of*payment, in addiction reducing capital accumulation and productivity growth. This research work is to examine the effectiveness of inflation and economic growth in Nigeria showing how inflation can affect every sector in the economy, to identify the causes and examine the pattern of inflation in Nigeria over the years, The secondary data employed for this work were sourced from Central Bank Of Nigeria( CBN) statistical bulletin December (2008).Tlie ordinary least square (OLS) criterion was adopted in determining the relationship between the Dependent and independent variable, using the Statistical Package of Social Sciences (SPSS), A two model equation were adopted in this research work. However W£ results from this regression model R2 adjusted is 0.999, which implies that 99.9% of the total variation of real Gross Domestic Product (GDP) can be attributed to the specified explanatory variables which is 0.1% is attributed to the variation of the independent variable, also the R2 is 0.81, which implies 81.0% of the total variation of inflation rate can be attributed to the specified explanatory variables, while 19% is attributed to the independent variable. The R2 -adjusted is -0.0086 which implies -86% variation in the inflation rate is caused by the variation of the explanatory variables. In conclusion,- government should include policies that will protect and cover every sector in the economy, this will stand ass a yardstick for measuring performance of each sector, and inflation will also be checked at alongside with performance, firms may have to devote more resources to dealing with the effects of inflation

Recommendation: There is a wide gap between inflation and economic growth. Effective monetary and fiscal policies via an efficient tax and administration ought to be employed in order to stem this tide since inflation is not caused by the excess money supply, some of the monetary and fiscal policy instrument will have little effect in controlling inflation. Keywords: inflation control, economic growth, Nigeria



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