IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v8y2024i9p2606-2620.html
   My bibliography  Save this article

Is there a Trade-Off between Inflation and Unemployment: The Case of Nigeria

Author

Listed:
  • Onwuemeka, Irene Olanma

    (Department of Eonomics, Renaissance University Ugbawka, Enugu State.)

  • Obiukwu, Sandralyn Ifeoma

    (Department of Economics, Alvan Ikoku Federal University of Education, Owerri, Imo State.)

  • Abamara, Kelechi Chibueze

    (Department of Economics, Nnamdi Azikiwe University, Awka, Anambra State.)

  • Okeke, Queen Chijindu

    (Department of Economics, Nnamdi Azikiwe University, Awka, Anambra State.)

Abstract

This study examined whether a trade-off exist between inflation and unemployment in Nigeria by investigating the validity of the Phillips Curve Preposition in the Nigerian economy using data from 1981-2022. The Autoregressive Distributed Lag Bounds of cointegration was employed for the analysis of short-run and long-run effects of inflation, population growth rate and foreign direct investment on unemployment. The short-run result endorsed the validity of the Phillips Curve preposition in Nigeria. Thus, a moderate inflation is tolerated in order to enjoy low unemployment in the short-run and vice verse. However, the results of the long-run revealed that there is no trade-off between inflation and unemployment in Nigeria and that the Phillips Curve is a vertical line at the natural rate of unemployment. Furthermore, the causality results showed the presence of unidirectional causality from inflation to unemployment in Nigeria. On the basis of this study it can be concluded that an attempt to decrease unemployment at the cost of higher inflation in the short run led to higher inflation and no change in unemployment in the long run in Nigeria. Consequently, we recommend among others, adoption of discretionary policy that would reduce unemployment by boosting government spending and at same time maintain stability in money supply. In addition, creation of a more business friendly economy by the government is needed to attract foreign direct investment into the economy for job creation.

Suggested Citation

  • Onwuemeka, Irene Olanma & Obiukwu, Sandralyn Ifeoma & Abamara, Kelechi Chibueze & Okeke, Queen Chijindu, 2024. "Is there a Trade-Off between Inflation and Unemployment: The Case of Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(9), pages 2606-2620, September.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:9:p:2606-2620
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-8-issue-9/2606-2620.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/is-there-a-trade-off-between-inflation-and-unemployment-the-case-of-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    2. Perron, Pierre, 1988. "Trends and random walks in macroeconomic time series : Further evidence from a new approach," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 297-332.
    3. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    4. A. W. Phillips, 1958. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957," Economica, London School of Economics and Political Science, vol. 25(100), pages 283-299, November.
    5. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
    6. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rita Ariani & Kamal Fachrurrozi & Adhiana Adhiana & Akhmad Baihaqi, 2024. "Agriculture Productivity and Environmental Degradation in Indonesia: A Time Series Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 14(6), pages 665-674, November.
    2. Muhammad Shahbaz & Ramzi Benkraiem & Anthony Miloudi & Aviral Kumar Tiwari, 2019. "Tourism-induced financial development in Malaysia: New evidence from the tourism development index," Tourism Economics, , vol. 25(5), pages 757-778, August.
    3. Shahiduzzaman, Md. & Alam, Khorshed, 2014. "The long-run impact of Information and Communication Technology on economic output: The case of Australia," Telecommunications Policy, Elsevier, vol. 38(7), pages 623-633.
    4. Md Shahiduzzaman & Allan Layton & Khorshed Alam, 2015. "On the contribution of information and communication technology to productivity growth in Australia," Economic Change and Restructuring, Springer, vol. 48(3), pages 281-304, November.
    5. Shahbaz, Muhammad & Loganathan, Nanthakumar & Sbia, Rashid & Afza, Talat, 2015. "The effect of urbanization, affluence and trade openness on energy consumption: A time series analysis in Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 683-693.
    6. Eléazar Zerbo, 2015. "CO2 emissions, growth, energy consumption and foreign trade in Sub-Sahara African countries," Working Papers hal-01110769, HAL.
    7. Ismail Bulent Gurbuz & Irfan Kadioglu, 2023. "Grain Production in Turkey and Its Environmental Drivers Using ARDL in the Age of Climate Change," Sustainability, MDPI, vol. 16(1), pages 1-16, December.
    8. Md. Shahiduzzaman & Khorshed Alam, 2014. "A reassessment of energy and GDP relationship: the case of Australia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(2), pages 323-344, April.
    9. Kaminski, Jermain & Hopp, Christian & Tykvová, Tereza, 2019. "New technology assessment in entrepreneurial financing – Does crowdfunding predict venture capital investments?," Technological Forecasting and Social Change, Elsevier, vol. 139(C), pages 287-302.
    10. Eléazar Zerbo, 2017. "Energy consumption and economic growth in Sub-Saharan African countries: Further evidence," Economics Bulletin, AccessEcon, vol. 37(3), pages 1720-1744.
    11. Jerome Geyer‐Klingeberg & Andreas W. Rathgeber, 2021. "Determinants of the WTI‐Brent price spread revisited," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 41(5), pages 736-757, May.
    12. Zhang, Guoxing & Nuruzzaman, Md & Su, Bin, 2021. "Nexus between household energy consumption and economic growth in Bangladesh (1975–2018)," Energy Policy, Elsevier, vol. 156(C).
    13. Mario Gómez & Aitor Ciarreta & Ainhoa Zarraga, 2018. "Linear and Nonlinear Causality between Energy Consumption and Economic Growth: The Case of Mexico 1965–2014," Energies, MDPI, vol. 11(4), pages 1-15, March.
    14. Sudeshna Ghosh, 2020. "Impact of economic growth volatility on income inequality: ASEAN experience," Quality & Quantity: International Journal of Methodology, Springer, vol. 54(3), pages 807-850, June.
    15. Pavlos Stamatiou, 2022. "Modeling Electricity Consumption for Growth in an Open Economy," International Journal of Energy Economics and Policy, Econjournals, vol. 12(2), pages 154-163, March.
    16. Andrés, Antonio R. & Halicioglu, Ferda, 2010. "Determinants of suicides in Denmark: Evidence from time series data," Health Policy, Elsevier, vol. 98(2-3), pages 263-269, December.
    17. Nikeel Kumar & Ronald Ravinesh Kumar & Radika Kumar & Peter Josef Stauvermann, 2020. "Is the tourism–growth relationship asymmetric in the Cook Islands? Evidence from NARDL cointegration and causality tests," Tourism Economics, , vol. 26(4), pages 658-681, June.
    18. Mohammad I. Elian & Khalid M. Kisswani, 2018. "Oil price changes and stock market returns: cointegration evidence from emerging market," Economic Change and Restructuring, Springer, vol. 51(4), pages 317-337, November.
    19. Hande Aksöz Yılmaz, 2020. "The Impact of Foreign Trade on Immigration from Turkey to Germany: ARDL Bounds Test Approach," Journal of Economy Culture and Society, Istanbul University, Faculty of Economics, vol. 62(62), pages 123-143, December.
    20. Kumar, Nikeel Nishkar & Patel, Arvind, 2023. "Nonlinear effect of air travel tourism demand on economic growth in Fiji," Journal of Air Transport Management, Elsevier, vol. 109(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:8:y:2024:i:9:p:2606-2620. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.