INFLATION AND ECONOMIC GROWTH IN NIGERIA

The persistent rise in inflation and its implications on economic growth remain pressing issues in Nigeria’s macroeconomic discourse. Despite numerous studies on the inflation–growth relationship, mixed evidence continues to emerge regarding their long-run and short-run dynamics. Over the years, inflationary pressures driven by exchange rate volatility, fiscal imbalances, and structural rigidities have raised concerns about the country’s ability to sustain long-term economic growth. While several empirical studies have examined the relationship between inflation and economic growth, findings remain inconclusive, particularly in the context of developing economies like Nigeria. This study investigates the dynamic relationship between inflation and economic growth in Nigeria over the period 1991–2023. Annual time series data were sourced from the Central Bank of Nigeria (CBN), World Bank, and National Bureau of Statistics (NBS). The study employs the Autoregressive Distributed Lag (ARDL) model to estimate both short-run and long-run effects, complemented by the Johansen cointegration test and an error correction mechanism (ECM) to confirm the existence of long-run equilibrium. The findings reveal that inflation has a negative but statistically insignificant impact on economic growth in both the short and long run, indicating that inflationary increases do not directly enhance growth. Granger causality analysis further reveals a unidirectional causal relationship flowing from inflation to economic growth. These results underscore the need for sound inflation-targeting policies, fiscal discipline, and structural reforms to enhance macroeconomic stability and stimulate sustainable economic performance. Policymakers are urged to adopt comprehensive strategies that address inflation without compromising growth targets. Keywords: Nigeria, Economic Growth, Inflation, Keynesian Theory, ARDL model Word Count: 246