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Revisiting the Validity of Phillips Curve in Nigeria: An ARDL Approach

Author

Listed:
  • Yakubu EGEDE

    (Modibbo Adama University, Yola, Nigeria)

  • Umaru AMINU

    (Central Bank of Nigeria, Abuja, Nigeria)

  • Aminu HAMMA

    (Modibbo Adama University, Yola, Nigeria)

  • Caroline Iyabo ADEMOLA-JOHN

    (University of Prishtina, Republic of Kosovo)

Abstract

It is evident that in Nigeria inflation and unemployment are growing simultaneously and pose a serious question in terms of the validity of the Phillips curve in Nigeria. This study investigates the relationships that exist with respect to inflation and unemployment in Nigeria using data from the CBN statistical bulletin (2020) from 1981 to 2020. The ARDL model (autoregressive distributed lag) was employed in the study. The study revealed an inverse and significant link between inflation and unemployment only in the short run, while a positive, as well as significant relationship, was found that connects inflation and output in Nigeria also in the short run. We, therefore, recommend the need for government to always consider unemployment in formulating policies aimed at achieving price stability. We also recommend that the government adopts labour-intensive techniques of production to reduce costs and, by extension, reduce the prices of goods and services.

Suggested Citation

  • Yakubu EGEDE & Umaru AMINU & Aminu HAMMA & Caroline Iyabo ADEMOLA-JOHN, 2023. "Revisiting the Validity of Phillips Curve in Nigeria: An ARDL Approach," Management and Economics Review, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 8(1), pages 24-34, February.
    • Handle: RePEc:rom:merase:v::y:2023:i:1:p:24-34
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    References listed on IDEAS

    as
    1. Efayena, Obukohwo Oba & Olele, Hilda Enoh, 2020. "A Validation of the Phillips Curve Hypothesis in Nigeria: A Quarterly Data-Based Approach," MPRA Paper 98804, University Library of Munich, Germany.
    2. repec:jle:journl:172 is not listed on IDEAS
    3. Abdulsalam S. Ademola & Abdullahi Badiru, 2016. "The Impact of Unemployment and inflation on Economic Growth in Nigeria (1981–2014)," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 9(1), pages 47-55, April.
    4. Samuel Ugochukwu Daniel & Victoria Chidinma Israel & Chibuzor Benjamin Chidubem & Joel Quansah, 2021. "Relationship Between Inflation and Unemployment: Testing Philips Curve Hypotheses and Investigating the Causes of Inflation and Unemployment in Nigeria," Traektoriâ Nauki = Path of Science, Altezoro, s.r.o. & Dialog, vol. 7(09), pages 1013-1027, September.
    5. Çağlayan TABAR & Işın KIRIŞKAN ÇETİN, 2016. "Phillips Curve Analysis In The Case Of Turkey," JOURNAL OF LIFE ECONOMICS, Holistence Publications, vol. 3(4), pages 79-100, October.
    6. Brian Reinbold & Yi Wen, 2020. "Is the Phillips Curve Still Alive?," Review, Federal Reserve Bank of St. Louis, vol. 102(2), pages 121-144, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    ARDL; Inflation; Output; Unemployment;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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