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The Main Determinants of Inflation in Nigeria

Author

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  • Mr. Gary G. Moser

Abstract

This paper provides a selective review of the literature on the determinants of inflation in Nigeria, analyzes the dominant factors influencing inflation, presents the empirical results of a reduced-form elasticities model, and discusses the policy implications of the empirical results. The results of this analysis confirm the basic findings of earlier studies, namely that monetary expansion, driven mainly by expansionary fiscal policies, explains to a large degree the inflationary process in Nigeria. Other important factors are the devaluation of the naira and agroclimatic conditions. With respect to the depreciation of the naira, it was found that concurrent fiscal and monetary policies had a major influence on its impact on inflation. Given the considerable role of food commodities in the CPI, agroclimatic conditions (rainfall) were found to play a significant role in overall movements in prices and should be fully taken into consideration in any analysis of the inflationary process in Nigeria.

Suggested Citation

  • Mr. Gary G. Moser, 1994. "The Main Determinants of Inflation in Nigeria," IMF Working Papers 1994/076, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1994/076
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    Cited by:

    1. Oluwole Alfred Olatunji, 2010. "The impact of oil price regimes on construction cost in Nigeria," Construction Management and Economics, Taylor & Francis Journals, vol. 28(7), pages 747-759.
    2. Mame Astou Diouf, 2007. "Modeling Inflation for Mali," IMF Working Papers 2007/295, International Monetary Fund.
    3. Elmer Sterken, 2004. "Demand for money and shortages in Ethiopia," Applied Economics Letters, Taylor & Francis Journals, vol. 11(12), pages 759-769.
    4. repec:dgr:rugcds:199909 is not listed on IDEAS

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