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Inflation And Unemployment Nexus In Nigeria: Another Test of the Phillips Curve

Author

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  • Anthony Orji
  • Onyinye I Anthony-Orji
  • Joan C Okafor

Abstract

This research work examines the inflation and unemployment nexus in Nigeria by testing if the original Phillips curve proposition holds for Nigeria. The study adopted a distributed lag model with data covering the period 1970-2011. The consumer’s price index (a measure of inflation rate), was regressed on unemployment rate, growth rate of money supply, budget deficit, real gross domestic product, interest rate and the lag of current interest rate. The result reveals that unemployment is a significant determinant of inflation and that there is a positive relationship between inflation and unemployment rate in Nigeria. This finding invalidates the original proposition on the Phillips curve hypothesis in Nigeria. The study therefore recommends that the economy should be diversified and appropriate policies should be put in place by Government and the monetary authorities in order to curb the menace of inflation and unemployment and consequently reduce the problem of stagflation in Nigeria. Again, there is a need for strong institutional collaboration in dealing with these two macroeconomic variables; unemployment and inflation as have been recommended in the paper.

Suggested Citation

  • Anthony Orji & Onyinye I Anthony-Orji & Joan C Okafor, 2015. "Inflation And Unemployment Nexus In Nigeria: Another Test of the Phillips Curve," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(5), pages 766-778.
    • Handle: RePEc:asi:aeafrj:v:5:y:2015:i:5:p:766-778:id:1384
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    Citations

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    Cited by:

    1. Effiong, Ubong Edem & Akpan, Ekomabasi & Ekpe, John Polycarp, 2022. "Testing the Validity of the Inflation-Unemployment Nexus within the West African Monetary Zone," MPRA Paper 119722, University Library of Munich, Germany, revised 08 Aug 2022.
    2. Stephen T. Onifade & Ahmet Ay & Simplice A. Asongu & Festus V. Bekun, 2019. "Revisiting the Trade and Unemployment Nexus: Empirical Evidence from the Nigerian Economy," Research Africa Network Working Papers 19/079, Research Africa Network (RAN).
    3. Agbutun Shedrach Adzugbele & Afamefuna Angus Eze & Ejimofor Morba & Nnebuihe Ihechi Nwokocha, 2020. "Exchange Rate and Unemployment in Nigeria: An ARDL Approach," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(3), pages 53-58, September.
    4. Nurudeen Abu, 2019. "Inflation and Unemployment Trade-off: A Re-examination of the Phillips Curve and its Stability in Nigeria," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(1), March.
    5. Richardson Kojo Edeme, 2018. "Providing an Empirical Insight into Nigeria’s Non-acceleration Rate of Unemployment," Journal of Development Policy and Practice, , vol. 3(2), pages 179-190, July.
    6. Zakia Batool & Qurat ul Ain & Abdul Rehman, 2024. "Exploring the effects of farm mechanization, financial development, and renewable energy on China’s food production," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 18883-18902, July.
    7. Abdul Rehman & Laura Mariana Cismas & Ioana Anda Milin, 2022. "“The Three Evils”: Inflation, Poverty and Unemployment’s Shadow on Economic Progress—A Novel Exploration from the Asymmetric Technique," Sustainability, MDPI, vol. 14(14), pages 1-16, July.

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