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Rural and Urban price inflation components in Nigeria: Persistence, Connectedness and Spillovers

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Listed:
  • Yaya, OlaOluwa S.
  • Olayinka, Hammed Abiola
  • Adebiyi, Aliu A
  • Atoi, Ngozi Victor
  • Olugu, Mercy U.
  • Akinkunmi, Wasiu B.

Abstract

We checked against the law of one price between urban and rural consumer price indices of goods and services in Nigeria, using data that span January 1995 to April 2024. By first testing for persistence in price indices, we found a similar pattern of persistence that is non-mean reverting in all the CPI components except in Communication and Education where mean reversions are possible in the urban and rural areas. Communication and Restaurants & Hotels are major net inflation transmitters in both urban price region and rural price regions, while Clothing & footwear, and Furnishings & Household equipment maintenance also have minor roles to play in this regard at both price regions. Food & Non-alcoholic beverages; and Alcoholic beverages, tobacco & kola; transportation; Recreation and culture; and Miscellaneous goods and services are major net inflation shock receivers. We found Housing, water, electricity, gas and other fuel; Health; and Education to have different inflation shock transmitting roles for both urban and rural areas. Pricing at urban and rural areas are in tandem, thus policies that could further close the price gaps such as urbanisation and good road systems should be enacted.

Suggested Citation

  • Yaya, OlaOluwa S. & Olayinka, Hammed Abiola & Adebiyi, Aliu A & Atoi, Ngozi Victor & Olugu, Mercy U. & Akinkunmi, Wasiu B., 2024. "Rural and Urban price inflation components in Nigeria: Persistence, Connectedness and Spillovers," MPRA Paper 121106, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121106
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    References listed on IDEAS

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    2. Omotosho, Babatunde S. & Doguwa, Sani I., 2012. "Understanding the dynamics of inflation volatility in Nigeria: A GARCH perspective," MPRA Paper 96125, University Library of Munich, Germany.
    3. Emmanuel O. Akande & Elijah O. Akanni & Oyedamola F. Taiwo & Jeremiah D. Joshua & Abel Anthony, 2023. "Predicting inflation component drivers in Nigeria: a stacked ensemble approach," SN Business & Economics, Springer, vol. 3(1), pages 1-32, January.
    4. Ette Harrison Etuk, 2012. "A Seasonal Arima Model for Daily Nigerian Naira-Us Dollar Exchange Rates," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 2(6), pages 219-227, December.
    5. Tule, Moses K. & Salisu, Afees A. & Ebuh, Godday U., 2020. "A test for inflation persistence in Nigeria using fractional integration & fractional cointegration techniques," Economic Modelling, Elsevier, vol. 87(C), pages 225-237.
    6. Antonakakis, Nikolaos & Gabauer, David, 2017. "Refined Measures of Dynamic Connectedness based on TVP-VAR," MPRA Paper 78282, University Library of Munich, Germany.
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    More about this item

    Keywords

    CPI inflation; Nigeria; Urban-rural price differentials;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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