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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, International Journal of Economics and Financial Issues, vol. 6(4), pages 1400-1406.
    • Handle: RePEc:eco:journ1:2016-04-15
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    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. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
    3. KASIDI, Faraji & MWAKANEMELA, Kenani, 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.
    4. repec:asi:ajoerj:2013:p:363-380 is not listed on IDEAS
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    Keywords

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    JEL classification:

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

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