An Econometric Analysis of the Nature and Causes of Inflation in Nigeria

Authors

J. O. Asogu, Central Bank of Nigeria

Publisher

Central Bank of Nigeria

Keywords

Econometric Analysis, Inflation, Nigeria

Abstract

In this econometric revisitation of inflation in Nigeria, an extensive review of the literature and evidence has been attempted culminating in a specification of the various alternative hypotheses on the causes of inflation. While not ruling out the validity of several theories of inflation in the Nigerian situation, empirical evidence indicates that increases in real domestic produce or supply situation, especially food, and law cost of production of consumables, tended to ameliorate inflation. On the other hand, increases in government expenditure, especially deficits, tend to increase the money supply and worsen depreciation of the exchange rate, which in turn intensify the inflationary pressure. Bringing together these conclusions, the study emphasises the need for fiscal discipline including prunning dawn deficit financing, intensification of restructuring measures that would enhance output and productivity in the domestic economy. These measures need to be complemented with a more pragmatic exchange rate policy that would stem capital flight and encourage more investment in the Nigerian economy.

Author Bio

The author is the Deputy Director and Head, Statistical Services Division, Research Department, Central Bank of Nigeria

Publication Title

CBN Economic and Financial Review

Issue

3

Volume

29

Recommended Citation

Asogu, J. O. (1991). An Econometric Analysis of the Nature and Causes of Inflation in Nigeria. CBN Economic and Financial Review, 29(3), 239-254.