INFLATION THRESHOLDS AND ECONOMIC GROWTH: EVIDENCE FROM NIGERIA
Journal Title: Asian Economic and Financial Review - Year 2012, Vol 2, Issue 7
Abstract
Inflation is one of the most challenging macroeconomic objectives capable of frustrating every pragmatic effort at achieving other macroeconomics goals if not curtailed. To this end, the paper empirically examines the threshold inflation rate that is considered optimally reasonable for maintaining a sustainable economic growth. The study in specific terms employs a least square multivariate approach to estimate a threshold level of inflation. Further, error correction modeling (ECM) approach was explored to identify the long run relationship among other major determinants of real GDP growth using a simple augmented production function. In addition, a pairwise granger causality test was conducted to explore the causal link between the inflation and growth of real GDP. Interestingly, it was observed from the causality test that there was neither bidirectional nor unidirectional causality between the two but rather an independent relationship. The findings from least square estimation also established 9% threshold inflation level. The results from ECM confirmed the values of lagged of real GDP growth rates, investment, current inflation, population growth and terms of trade as important factors affecting growth rates of real GDP in Nigeria. Based on the outcome of the results it was therefore suggested that an identification of country-specific inflation thresholds in the inflation-growth relationship might provide useful information about the appropriate location and width of an inflation targeting band.
Authors and Affiliations
Kazeem Bello Ajide| Department of Economics University of Lagos, Lagos, Nigeria, Olukemi Lawanson| Department of Economics University of Lagos, Lagos, Nigeria
DO CORPORATE GOVERNANCE AND SOCIAL PERFORMANCE DIFFER BETWEEN FAMILY-OWNED AND NON-FAMILY-OWNED BUSINESSES IN TAIWAN-LISTED CSR COMPANIES?
The objective of this analysis into examines the social performance and corporate governance differences between family-owned firms and non-family-owned firms, along with the impact of corporate governance variables. The...
DETERMINATION OF THE IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY: AN EMPIRICAL STUDY FROM THE CEMENT SECTOR IN PAKISTAN
This paper examines the impact that the running assets management on the profitability of Pakistan cement sector. Moreover, the study outlines the main factors that basically determine the working capital in the financia...
SUGGESTION OF ISLAMIC INSURANCE COMPANY MODEL
This study is one of very few studies which have investigated Islamic Insurance Companies as solution. It explained its operations also comparing with Traditional Insurance Companies and theoretical Islamic insurance mod...
THE SCOPE FOR INCREASING BIOFUEL CROP PRODUCTION IN JAPAN: AN ANALYSIS OF ALTERNATIVE POLICIES
In 2010, concerns regarding Japan?s excessive dependence on imports for food and energy caused the Japanese government to introduce subsidies to stimulate biofuel crop production. In this paper, we study the viability of...
FURNITURE INDUSTRY IN TURKEY DUE TO PRODUCT AND PROCESS ADDITIONAL WORK OR THE SCOPE OF THE METHOD
The primary objective of work study techniques to increase productivity and conduct in this context is to reduce costs. However, the result of work-study techniques not only intended to provide a benefit to the company,...