Volume 1, Issue 1, September 2017, Page: 22-34
An Examination of the Impact of Unemployment and Inflation on the Nigerian Economy: A Bounds Testing Approach
Hycenth Amakiri Ajie, Department of Economics, Federal University, Wukari, Nigeria
Emmanuel Chukwunonyem Ani, Department of Economics, Federal University, Wukari, Nigeria
Ojiya Emmanuel Ameh, Department of Economics, Federal University, Wukari, Nigeria
Received: May 13, 2017;       Accepted: May 31, 2017;       Published: Jul. 18, 2017
DOI: 10.11648/j.jppa.20170101.13      View  1971      Downloads  149
Despite countervailing views and propaganda from government sponsored media agencies, there is a preponderance of evidence that the Nigerian economy is challenged on all fronts by the daily geometric increase in her unemployment figures, hence this study is undertaken to examine the impact of unemployment and inflation on the Nigerian economy between 1981 to 2015. The study adopted an Autoregressive Distributed Lag (ARDL) approach and other econometric tools of analysis to answer the objectives set out in the study. The Augmented Dickey-Fuller, Phillip-Perron Unit Root Test and Bounds Test method of cointegration employed indicates that the series used in the model are all stationary with a unique long run relationship established among the variables. Major findings revealed that unemployment has an insignificant impact on economic growth. The study also established an inverse relationship between inflation and economic growth within the period under reference. Based on the foregoing, the following recommendations among others were made: First, in a bid to control the naira exchange rate since it does have bearing on inflation, the government should put in place an enduring framework to buffet the risk of the domestic producers for them to take innovative roles of developing and manufacturing products that will have competitive advantage in the international markets. This is critical to the realization of a stable inflation rate and self-reliance for Nigeria. Secondly government should revitalize the various ailing industries and establish new ones to encourage massive industrialization. This strategy will create massive jobs for the teeming graduates and reduce the frightening unemployment figures confronting Nigeria.
Unemployment, Inflation, Economic Growth, ARDL
To cite this article
Hycenth Amakiri Ajie, Emmanuel Chukwunonyem Ani, Ojiya Emmanuel Ameh, An Examination of the Impact of Unemployment and Inflation on the Nigerian Economy: A Bounds Testing Approach, Journal of Public Policy and Administration. Vol. 1, No. 1, 2017, pp. 22-34. doi: 10.11648/j.jppa.20170101.13
Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
International Labour Organization (ILO, 2001), Labour Statistics Yearbook, Geneva.
Eze, T. C.(2015). Relative Impact of' Inflation and Unemployment on Economic Growth in Nigeria (1980 B2013). Advances in Social Sciences Research Journal, (2 (7)) 27B44.
International Labour Organization (ILO, 2014), Labour Statistics Yearbook, Geneva.
Balami, G. (2006). Innovation and Growth in Developing Countries, Journal of Development Economics, July. Growth in Developing Countries, Journal of Economic Literature, 33 (3), September Growth in the Global Economy (Cambridge, Mass: MIT Press). Bannock A. (1998).
Hamilton, A. (2001). Exploding Inflation. Zeal Intelligence Press.
World Bank (1998). World Development Indicators,”Washington, D. C. The World Bank.
Piana, V. (2001). Inflation Economic. Web Institute.
Tairu, F. O. (2003) Urban Unemployment Situation in Nigeria. In E. O. Ezeani and N. N. Elekwa (Eds.). Issues in Urbanization and Urban Administration in Nigeria, 154-167. Enugu: Jamo Enterprises.
Orubu, C. O. (1996). Anti-inflation policy in Nigeria: The past and the future. Nigerian Journal of Economic and Social Studies, 38 (2).
World Bank (2015) World Development Indicators.
Central Bank of Nigeria (2014) Statistical Bulletin,.
World Bank (2015) World Development Indicators.
World Bank (2015) World Development Indicators & Global Development Finance, 2012 March.
Central Bank of Nigeria (2014) Statistical Bulletin,
Salmanulfarisi, A. (2013) Expenditure on Agricultural Sector and Food Security in Nigeria International. Journal of Social Science Tomorrow, 2 (1): 1-6.
Olu and Idih (2015) Inflation and economic growth in Nigeria. Journal of Economics and International Business Management Vol. 3 (1), pp. 20-30, September 2015 ISSN: 2384-7328 Research Paper.
Okafor E. E (2011). Youth Unemployment And Implications For Stability Of Democracy In Nigeria. JSDA, 13(1). http://www.jsdafrica.com/Jsda/V13No1.
Idalu, R. E. (2015) Impact of Inflation on Economic Growth: Case Study of Nigeria (1970-2013). A research project submitted to the Institute of Graduate Studies and Research in partial fulfillment of the requirements for the Degree of Master of Science in Economics Eastern Mediterranean University Gazimağusa, North Cyprus.
Shuaib, Augustine, Frank (2015)”Impact of Inflation Rate on the Economic Growth in Nigeria” British Journal of Economics, Management & Trade 9 (3): 1-11, 2015, Article no. BJEMT. 15293 ISSN: 2278-098X.
Tunah, H. (2010). The Analysis of Unemployment in Turkey: Some Empirical Evidence Using Co integration Test. European Journal of Social Sciences, 18 (1), 18-38.
Lui, L. Q. (2009). Inflation and Unemployment: The roles of goos and labor market institution. 1 31.
Gillani, S. Y., Rehman, H. U., & Gill, A. R. (2009). Unemployment, Poverty, Inflation And Crime Nexus: Cointegration And Causality Analysis Of Pakistan. Pakistan Economic and Social Review, 47 (1), 79-98.
Altavilla, C., & Ciccarelli, M. (2007). Inflation forecasts, Monetary policy and Unemployment dynamics. European Central Bank (27), 1-37.
Kitov, I. O. (2006). Inflation, unemployment laborforce change in USA. 1-35.
Pallis, D. (2006). The trade off between inflation and unemployment in new European Union member-states. International Research Journal Of Finance and Economics (1), 81-97.
Osinubi, T. S. (2005). Macroeconometric Analysis Of Growth, Unemployment And Poverty In Nigeria. Pakistan Economic and Social Review, XLIII (2), 249-269.
Sweidan, O. D. (2004). Does Inflation Harm Economic Growth in Jordan? An Econometric Analysis for the Period 1970-2000. International Journal of Applied Econometrics and Quantitative Studies, Vol. 1-2, pp. 41-66.
Mallik G, Chowdhury A. Inflation and economic growth: Evidence from South Asian Countries. Asian Pacific Development Journal. 2001; 8 (1): 123-135.
Faria, J. R. and Carneiro, F. G. (2001). Does High Inflation Affect Growth in the Long and Short-run? Journal of Applied Economics, Vol. IV, No. 1, pp. 89-105.
Shitundu, J, L and Luvanda, E. G (2000). The Effect of Inflation on Economic Growth in Tanzania. African Journal of Finance and Management, Vol. 9-1.
Malla, S. (1997). Inflation and Economic Growth: Evidence from a Growth Equation. mimeo, Department of Economics, University of Hawai’I at Monoa, Honolulu. Available at www.hawaii.edu/~malla.
Phillips, A. W. (1958). The Relationship between Unemployment and Rate of Change in Money Wage Rates in the United Kingdom. Economica 25, November.
Gujarati, N. (2004). 4th edn. Basic Econometrics. New York: The McGraw Hill.
Pesaran, M. H., &Pesaran, B. (1997). Working with Microfit 4.0: Interactive econometric analysis. Oxford, Oxford University Press.
Pesaran, M. H. and Smith, R. J. (1998). Structural Analysis of Cointegration VARS. Journal of Economic Surveys. 12: 471-505.
Pesaran, M. H., Shin, Y. and Smith, R. J.(2001). Bound Testing Approaches to the Analysis of level Relationships’, Journal of Applied Econometrics, 16, 289-326.
Pesaran M. H, Shin Y. (1997): Generalized Impulse response Analysis in Linear Multivariate Models: Department of Applied Economics, University of Cambridge.
Browse journals by subject