Inflation and Unemployment in Nigeria: An ARDL- Approach

Saad Buba, Salim Mohammed Ibrahim Aljadi

Adamawa State Polytechnic, Yola, Nigeria

Department of Economics, Sabha University, Libya

Accepted 10 November, 2017

Citation: Buba S, Aljadi SMI (2017). Inflation and Unemployment in Nigeria: An ARDL- Approach. World Journal of Economic and Finance 3(2): 069-074.

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Copyright: © 2017 Buba and Aljadi. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are cited.

Abstract

This study examines the effect of inflation on unemployment in Nigeria. Unemployment is a major problem in Nigeria, even with the growth rate of 7% within the study period, the problem is still on the increase. The study uses the period 1977 to 2011 in analyzing the long run impact of inflation on unemployment in Nigeria, based on the Phillips curve hypothesis, instead of relying on the traditional ballpark figure made by Nigerians. Real gross domestic product is also used as control variable. The study employed an Autoregressive Distributed Lag (ARDL) Model to test for bounds co-integration, the long run and the Error Correction Adjustment. The co-integration bound test showed that the variables are co-integrated. Our Findings validate the Phillips curve hypothesis as well, contradict the belief by Nigerians about the coexistence of unemployment and inflation in the country.

Keywords: Inflation; Unemployment; Phillips Curve; Autoregressive Distributed Lag; Nigeria