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An Examination of the Impact of Unemployment and Inflation on the Nigerian Economy: A Bounds Testing Approach

Received: 13 May 2017     Accepted: 31 May 2017     Published: 18 July 2017
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Abstract

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.

Published in Journal of Public Policy and Administration (Volume 1, Issue 1)
DOI 10.11648/j.jppa.20170101.13
Page(s) 22-34
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Unemployment, Inflation, Economic Growth, ARDL

References
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[2] 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.
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[9] Orubu, C. O. (1996). Anti-inflation policy in Nigeria: The past and the future. Nigerian Journal of Economic and Social Studies, 38 (2).
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[16] 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.
[17] Okafor E. E (2011). Youth Unemployment And Implications For Stability Of Democracy In Nigeria. JSDA, 13(1). http://www.jsdafrica.com/Jsda/V13No1.
[18] 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.
[19] 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.
[20] 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.
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[25] 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.
[26] Osinubi, T. S. (2005). Macroeconometric Analysis Of Growth, Unemployment And Poverty In Nigeria. Pakistan Economic and Social Review, XLIII (2), 249-269.
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Cite This Article
  • APA Style

    Hycenth Amakiri Ajie, Emmanuel Chukwunonyem Ani, Ojiya Emmanuel Ameh. (2017). An Examination of the Impact of Unemployment and Inflation on the Nigerian Economy: A Bounds Testing Approach. Journal of Public Policy and Administration, 1(1), 22-34. https://doi.org/10.11648/j.jppa.20170101.13

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    ACS Style

    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. J. Public Policy Adm. 2017, 1(1), 22-34. doi: 10.11648/j.jppa.20170101.13

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    AMA Style

    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. J Public Policy Adm. 2017;1(1):22-34. doi: 10.11648/j.jppa.20170101.13

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  • @article{10.11648/j.jppa.20170101.13,
      author = {Hycenth Amakiri Ajie and Emmanuel Chukwunonyem Ani and Ojiya Emmanuel Ameh},
      title = {An Examination of the Impact of Unemployment and Inflation on the Nigerian Economy: A Bounds Testing Approach},
      journal = {Journal of Public Policy and Administration},
      volume = {1},
      number = {1},
      pages = {22-34},
      doi = {10.11648/j.jppa.20170101.13},
      url = {https://doi.org/10.11648/j.jppa.20170101.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jppa.20170101.13},
      abstract = {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.},
     year = {2017}
    }
    

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    T1  - An Examination of the Impact of Unemployment and Inflation on the Nigerian Economy: A Bounds Testing Approach
    AU  - Hycenth Amakiri Ajie
    AU  - Emmanuel Chukwunonyem Ani
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    JF  - Journal of Public Policy and Administration
    JO  - Journal of Public Policy and Administration
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    AB  - 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.
    VL  - 1
    IS  - 1
    ER  - 

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Author Information
  • Department of Economics, Federal University, Wukari, Nigeria

  • Department of Economics, Federal University, Wukari, Nigeria

  • Department of Economics, Federal University, Wukari, Nigeria

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