Inflationary and Recessionary Pressure in Nigeria (Coharane Orcutt Iterative and Arima Model Methods) (Published)
Nigerian economy is technically in Recession. This is because it has been smacked hard by the pressure of economic recessionary, caused by inflationary pressure, sky-scraping exchange rate, unemployment rate, interest rate and tax rate. This makes it imperative for the paper to examine inflationary and recessionary pressure in Nigeria. The study used multiple regression analysis on time series data which spanned the period of 1986-2016 with the aid of Coharane Orcutt iterative method to correct autocorrelation or serial correlation on selected macroeconomic variables based on the model employed. The results revealed negative contributions of these macroeconomic variables such as inflation rate, exchange rate, unemployment rate, interest rate and tax rate on Gross Domestic Product as proxy to measure recessionary pressure in Nigeria. This was attributed to the fact that a fall in economic growth proxy by GDP for two consecutive quarters in an economy is an evidence of economic recession. The study further examined the performance of the forecasting ability of the model, and how well the simulated series track the actual data. In doing this, historical simulation of the model was carried out. Thus, it was observed that, ARIMA model performed well in different periods and ARIMA was also considered good as a benchmark model. The study recommended that Nigeria needs optimistic economic revolution through relative price stability, devaluation of naira, diminution of unemployment rate (provision for self employment), moderate rise in interest rate and finally reduced tax rates on individuals, small businesses, and corporations by lowering the tax rate by at least 10% points.