INFLATION ON ECONOMIC GROWTH IN NIGERIA (1994-2021)

The study examines the effect of inflation on economic growth in Nigeria from 1994 2021. This study adopted secondary data. The research was carried out using Ex- post facto research design. The secondary data is a data compiled by other sources and obtained by the researcher. The data for the variables was sourced from the World Bank Development Indicators for the years 1994 -2021. The study utilized unit root test through the application of Augmented Dickey-Fuller (ADF) to test for stationarity, Either of Ordinary Least Square estimation technique and Johansen Co-integration technique was employed in the analysis of the data. The outcome was determine by Vector Error Correction Model (VECM) to estimate the short run relationship between the variables while the Granger causality test is applied to examine the causality between inflation and economic growth in Nigeria. The study concluded that inflation has a significant effect on the economic growth of Nigeria, and the major determinants of inflation in Nigeria are interest rate and exchange rate. The study further recommends that: Government should make tight fiscal and monetary policies to reduce the inflation rate of the country and have the most advantageous interest rate, and so as to increase the gross domestic product of the country and thereby attract more foreign investors to the country. Government should increase the degree openness of the economy and this can be viable and thereby increase the percentage of foreign investors. Government should encourage the export promotion strategies in order to maintain a surplus balance of trade and also conducive environment, adequate security, as well as infrastructural facilities should be provided.