Inflationary Trends and Its Determinants in Nigeria
DOI:
https://doi.org/10.55208/aj.v3i1.63Keywords:
Inflation, Money Supply, Exchange, Expenditures and DebtAbstract
This study examined Nigerian inflationary trends and drivers from 1985 through 2021(37years). The study explored how Money Supply (MS), Dollar Exchange Rate (DEXCHR), Government Expenditure (GEXP), and National Debt (NDT) affect Nigeria's Inflation Rate (INFLR). The Autoregressive distributed lag model showed mixed integration in aggregate secondary data from a CBN Statistical Bulletin. The model's multicollinearity and heteroskedasticity tests showed that it is homoskedastic and fit for prediction. MS only passed the statistical significance test long-term. This result means that MS is a strong predictor of INFLR in the long run (P-value = 0.0226) but not in the short run (P-value = 0.5056); DEXCHR had a positive but insignificant effect on INFLR in both the short and long runs (p-values = 0.3842 and 0.3981, respectively); LogGEXP had a negative but significant effect on INFLR in both the short and long runs (p-values = 0.0362 and So, inflationary factors do not affect INFLR in Nigeria very much. The report advised the central bank to stop printing cheap currency to reduce money supply.
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