IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2016-04-15.html
   My bibliography  Save this article

Dynamics of Inflation and Manufacturing Sector Performance in Nigeria: Analysis of Effect and Causality

Author

Listed:
  • Modebe Nwanneka Judith

    (Department of Banking and Finance, University of Nigeria Enugu Campus, Enugu, Nigeria,)

  • Ezeaku Hillary Chijindu

    (Department of Banking and Finance, Caritas University, Enugu, Nigeria)

Abstract

The inflation-growth linkage has been on the front burner of academic discourses. However, the relations between inflation and growth have mostly been studied at an aggregate level and the need to relate inflation to some specific activity sectors of an economy rather than from the perspective of total growth have been largely ignored. This gap in knowledge motivated this study which is aimed at examining the linkage between inflation and manufacturing sector growth in Nigeria using annualized time series data from 1982 to 2014. The baseline regression results reveal that inflation and interest rate have negative and non-significant effect on manufacturing sector growth while exchange rate appear to positively and significantly influence the growth of manufacturing sector value added. Granger causality results reveal a unidirectional causality running from exchange rate to output growth. Inflation and interest rate however are not causal for output growth and viz

Suggested Citation

  • Modebe Nwanneka Judith & Ezeaku Hillary Chijindu, 2016. "Dynamics of Inflation and Manufacturing Sector Performance in Nigeria: Analysis of Effect and Causality," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1400-1406.
    • Handle: RePEc:eco:journ1:2016-04-15
    as

    Download full text from publisher

    File URL: http://www.econjournals.com/index.php/ijefi/article/download/2681/pdf
    Download Restriction: no
    File URL: http://www.econjournals.com/index.php/ijefi/article/view/2681/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ugochukwu J. Nwoye & Justina N. Obiorah & Chukwunonso Ekesiobi, 2015. "Effect of Nigeria Macroeconomic Environment on the Performance of the National Economy: Implications," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(7), pages 42-51, July.
    2. Faraji KASIDI & Kenani MWAKANEMELA, 2013. "Impact of Inflation on Economic Growth: A Case Study of Tanzania," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 3(4), pages 363-380.
    3. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
    4. repec:asi:ajoerj:2013:p:363-380 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Azmat Hayat & Huma Ghulam & Maryam Batool & Muhammad Zahid Naeem & Abdullah Ejaz & Cristi Spulbar & Ramona Birau, 2021. "Investigating the Causal Linkages among Inflation, Interest Rate, and Economic Growth in Pakistan under the Influence of COVID-19 Pandemic: A Wavelet Transformation Approach," JRFM, MDPI, vol. 14(6), pages 1-22, June.
    2. Md. Sayebur Rahman, 2023. "Exploring the Impact of Inflation on Economic Development in Bangladesh," International Journal of Science and Business, IJSAB International, vol. 19(1), pages 87-96.
    3. Audi, Marc & Ali, Amjad & Fayad Hamadeh, Hani, 2022. "Nexus among innovations, financial development and economic growth in developing countries," MPRA Paper 115220, University Library of Munich, Germany.
    4. Nazir, Sidra & Saeed, Saira & Muhammad, Atta, 2017. "Threshold Modeling for Inflation and GDP Growth," MPRA Paper 79649, University Library of Munich, Germany.
    5. Muhammad AZAM KHAN* & Saleem KHAN*, 2018. "INFLATION AND THE ECONOMIC GROWTH: Evidence from Five Asian Countries," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 28(2), pages 235-252.
    6. Beatrix Paal & Bruce D. Smith, 2013. "The sub-optimality of the Friedman rule and the optimum quantity of money," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 911-948, November.
    7. Pierre‐Richard Agénor, 2004. "Macroeconomic Adjustment and the Poor: Analytical Issues and Cross‐Country Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 18(3), pages 351-408, July.
    8. Philip R. Lane, 1999. "What Determines the Nominal Exchange Rate? Some Cross Sectional Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 118-138, February.
    9. Ergungor, O. Emre, 2008. "Financial system structure and economic growth: Structure matters," International Review of Economics & Finance, Elsevier, vol. 17(2), pages 292-305.
    10. Baglan, Deniz & Yoldas, Emre, 2014. "Non-linearity in the inflation–growth relationship in developing economies: Evidence from a semiparametric panel model," Economics Letters, Elsevier, vol. 125(1), pages 93-96.
    11. Gregory D. Hess & Charles S. Morris, 1996. "The long-run costs of moderate inflation," Economic Review, Federal Reserve Bank of Kansas City, vol. 81(Q II), pages 71-88.
    12. Baharumshah, Ahmad Zubaidi & Slesman, Ly & Wohar, Mark E., 2016. "Inflation, inflation uncertainty, and economic growth in emerging and developing countries: Panel data evidence," Economic Systems, Elsevier, vol. 40(4), pages 638-657.
    13. Bruno, Michael & Ravallion, Martin & Squire, Lyn, 1996. "Equity and growth in developing countries : old and new perspectives on the policy issues," Policy Research Working Paper Series 1563, The World Bank.
    14. Mothuti Gosego & Phiri Andrew, 2018. "Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?," Global Economy Journal, De Gruyter, vol. 18(4), pages 1-11, December.
    15. Jess Benhabib & Mark M. Spiegel, 2009. "Moderate Inflation and the Deflation-Depression Link," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(4), pages 787-798, June.
    16. Eduardo Fern·ndez-Arias & Peter Montiel, 2001. "Reform and Growth in Latin America: All Pain, No Gain?," IMF Staff Papers, Palgrave Macmillan, vol. 48(3), pages 1-5.
    17. Devarajan, Shantayanan & Easterly, William R & Pack, Howard, 2003. "Low Investment Is Not the Constraint on African Development," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 547-571, April.
    18. Alexandru Minea & Patrick Villieu, 2006. "Thresholds Effects in Monetary and Fiscal Policies in a simple Cash-in-Advance Endogenous Growth Model," Post-Print halshs-00261219, HAL.
    19. Stanley Fischer, 1996. "Why are central banks pursuing long-run price stability?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 7-34.
    20. Abu N. M. Wahid & Muhammad Shahbaz & Pervaz Azim, 2011. "Inflation and Financial Sector Correlation: The Case of Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 145-152.

    More about this item

    Keywords

    Inflation; Manufacturing Sector; Vector Error Correction Model;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2016-04-15. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.