Macroeconomics

Quantum mechanics

Theoretical physics

Monetary policy

Inflation (cosmology)

Social psychology

Interest rate

Distributed lag

Granger causality

Economic stability

Real interest rate

Economics

Openness to experience

Real gross domestic product

Physics

Exchange rate

Psychology

Money supply

Monetary economics

Econometrics

Sociology

Gross domestic product

Broad money

Misery index

Consumption (sociology)

Consumer price index (South Africa)

Causality (physics)

Social science

Investment Management and Financial Innovations

In an attempt to examine the influence of inflation on the growth prospects of the Nigerian economy, the study employs the autoregressive distributed lag on the selected variables, i.e. real gross domestic product (GDP), inflation rate, interest rate, exchange rate, degree of economy`s openness, money supply, and government consumption expenditures for the period 1980–2018. The study findings indicate that inflation and real exchange rate exert a significant negative impact on economic growth, while interest rate and money supply indicate a positive and significant impact on economic growth. Other variables in the model depict no influence on the economic growth of Nigeria. The causality result shows the unidirectional relationships between interest rate, exchange rate, government consumption expenditures and gross domestic product. However, inflation and the degree of openness show no causal relationship with gross domestic product. As a result, the study recommends that a more pragmatic effort is needed by the monetary authorities to target the inflation vigorously to prevent its adverse effect by ensuring a tolerable rate that would stimulate the economic growth of Nigeria.

Impact of inflation on economic growth: evidence from Nigeria