DOES CHANGE IN PRICE LEVEL AID INDUSTRIAL SECTOR PRODUCTIVITY IN NIGERIA?

Hillary Chijindu Ezeaku, Gabriel A. Anidiobu, Paschal I. P. Okolie

Abstract


This goal of this study is to assess the effect of inflation on industrial output in Nigeria using annual data from 1982 to 2015. The error correction model (ECM) was employed to estimate the short-run and long-run dynamics, while the Engel and Granger residual-based technique for cointegration was employed to test for long-run relationship. The Findings revealed that inflation, official exchange rate and real interest rate had negative effects on Nigeria’s industrial output. A unit change in inflation rate and real interest rates brought about 9.2% and 3.3% decline in industrial output respectively. When however the broad money supply increased by 1%, industrial sector value added increased by 23.7%. Growth in broad money supply was however found to have significant positive effect on industrial production over the period. Based on the ECM, the study found that the last period’s deviation from long-run equilibrium is corrected at the speed of 62.7% annually. 

 

JEL: C22, E63, L60

 

Article visualizations:

Hit counter

DOI

Keywords


industrial output, inflation, broad money supply, error correction model

References


Ahmad, N., & Joyia, U. S. (2012). The Relationship between Inflation and Economic Growth in Pakistan: An Econometric Approach. Asian Journal of Research in Business Economics and Management, 2(9), 38-48

Aiyegbusi, O. S., Bankole, K. D., & Domma, S. O. (2014). Impact of Industrial Output on the Economy of Nigeria (1990-2014). International Journal of Social Science and Economic Research, 01(10), 1774–1784.

Bans-akutey, M., Deh, I. Y., & Mohammed, F. (2016). What is the effect of Inflation on Manufacturing Sector Productivity in Ghana? MPRA Paper, (75145), 1–10.

Behera, J., & Kumar, A. (2016). Inflation and Economic Growth Nexus in BRICS : Evidence from ARDL Bound Testing Approach. Asian Journal of Economic Modelling, 4(1), 1–17. http://doi.org/10.18488/journal.8/2016.4.1/8.1.1.17

Denbel, F. S., & Ayen, Y. W. (2016). The Relationship between Inflation, Money Supply and Economic Growth in Ethiopia : Co integration and. International Journal of Scientific and Research Publications, 6(1), 556–565.

Jayathileke, P. M. B., Kapila, R. M., & Rathnayake, T. (2013). Testing the Link between Inflation and Economic Growth : Evidence from Asia. Modern Economy, 4, 87–92.

Lu, X., Guo, K., & Tian, X. (2016). Study on the interactive mechanism of economic growth, inflation and capital markets using dynamic Bayesian factor graph. African Journal of Business Management Full, 10(12), 298–307. http://doi.org/10.5897/AJBM2016.8043

Madurapperuma, M. W. (2016). Impact of Inflation on Economic Growth in Sri Lanka. Journal of World Economic Research, 5(1), 1–7. http://doi.org/10.11648/j.jwer.20160501.11

Majumder, S. C. (2016). Inflation and its Impacts on Economic Growth of Bangladesh. American Journal of Marketing Research, 2(1), 17–26.

Mamo, F. T. (2012). Economic Growth and Inflation: A panel data analysis. Södertörns University Department of Social Sciences Economics Master Programme, Thesis, 1–44.

Modebe, N. J., & Ezeaku, H. C. (2016). Dynamics of Inflation and Manufacturing Sector Performance in Nigeria : Analysis of Effect and Causality. International Journal of Economics and Financial Issues, 6(4), 1400–1406.

Mwakanemela, K. (2013). Impact of inflation on economic growth : a case study of Tanzania. Asian Journal of Empirical Research, 3(4), 363–380.

Osuala, A.E., Osuala, K. I., & Onyeike, S. C. (2013). Impact of Inflation on Economic Growth in Nigeria – A Causality Test. JORIND, 11(1), 206–216.

Otalu, J. A., & Anderu, K. S. (2015). An Assessment of the Determinants of Industrial Sector Growth in Nigeria. Journal of Research in Business and Management, 3(7), 1–9.

Saritha, J., Swathi, V., Singh, A. A., & Kumar, S. A. (2015). A Study on Inflation Effect on Index of Industrial. IRJA Indian Research Journal, II(6), 1–10.

Sergii, P. (2009). Inflation and Economic Growth: The Non-Linear Relationship. Evidence from CIS Countries. A Thesis Submitted in Partial Fulfillment of the Requirements for the Degree of MA in Economics Kyiv School of Economics, 1–42.

Singh, S., & Singh, A. (2016). Causal Nexus between Inflation and Economic Growth of Japan. Iran. Econ. Rev., 19(3), 265–278.

Siyakiya, P. (2014). An Analysis of the Effects of Hyperinflation on Manufacturing Sector Output. International Institute of Social Sciences, The Hague, The Netherlands, (December), 1–67.

Tkalec, M., & Vizek, M. (2009). The Impact of Macroeconomic Policies on Manufacturing Production in Croatia. Privredna Kretanja I Ekonomska Politika, (121), 61–92.




Copyright (c) 2018 Hillary Chijindu Ezeaku, Gabriel A. Anidiobu, Paschal I. P. Okolie

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.

Copyright © 2015 - 2018. European Journal Of Social Sciences Studies (ISSN 2501-8590) is a registered trademark of Open Access Publishing Group. All rights reserved.

This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and  Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.


 

Hit counter