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Advances in Research, ISSN: 2348-0394,Vol.: 9, Issue.: 2

Original-research-article

Understanding the Relationship between Unemployment and Inflation in Nigeria

 

Odo Stephen Idenyi1*, O. Elom-Obed Favour1, O. Nwachukwu Johnson2 and O. Okoro Thomas1

1Department of Economics, Ebonyi State University, P.M.B. 053, Abakaliki, Ebonyi State, Nigeria.

2Department of Accountancy, Ebonyi State University, P.M.B. 053, Abakaliki, Ebonyi State, Nigeria.

Article Information
Editor(s):
(1) Paulo Jorge Silveira Ferreira, Superior School of Agriculture of Elvas (Polytechnic Institute of Portalegre), Portugal.
Reviewers:
(1) Viorica Chirila, University “Alexandru Ioan Cuza”, Romania.
(2) Christimulia Purnama Trimurti, Universitas Dhyana Pura, Indonesia.
(3) Siaw Anthony, Sichuan Agricultural University, Chengdu, China.
Complete Peer review History: http://www.sciencedomain.org/review-history/18477

Abstracts

This study investigated the relationship between unemployment and inflation in Nigeria from 1980-2015. The model specified unemployment as a function of inflation, money supply is a % GDP, total government expenditure % of GDP. The statistical tests used were causality test, VECM test, co integration test. Based on the above tests carried out, the study found out that:  Inflation significantly impacted unemployment in Nigeria both in the long run and short run within the period under review. This implies that increase in government expenditure reduces unemployment, it can also be inferred from the result that government spending creates employment to the extent that inflation remains within the single digit limit. Based on the results, the study recommended that government should use discretionary policy that would reduce unemployment by boosting government expenditure and maintain stability in money supply by using the traditional monetary instruments (such as open market operation, discount rate and special directive) to reduce the quantity of money in circulation.

Keywords :

Unemployment; inflation; Philip’s curve; Nigeria; co integration; granger causality.

Full Article - PDF    Page 1-12

DOI : 10.9734/AIR/2017/32218

Review History    Comments

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