IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/79765.html
   My bibliography  Save this paper

Unemployment and Inflation: Implication on Poverty Level in Nigeria

Author

Listed:
  • Siyan, Peter
  • Adegoriola, Adewale E.
  • Adolphus, James Ademola

Abstract

This study is carried out to empirically examine the implication of unemployment and inflation on poverty level in Nigeria from 1980-2014. Three variables are used in this paper which are Poverty level, Unemployment Rate and Inflation Rate. The variables were subjected to unit root test and they were all stationary at first difference I(1). Using the Johansen test, the variables were found to be co-integrated at 5% level of significance. Vector Auto Regressive (VAR) Model was used to determine the short-run relationship between the variables and the forth lag was selected based on the lag selection criterion. Forecast Error Variance Decomposition (FEVD) was obtained using the cholesky decomposition of the VAR residual. The result obtained showed the proportion of the variations in Poverty, inflation and unemployment rate attributed to their respective lag values. Granger causality test was carried out from the VAR model, and the result indicated that there is a bi-causality between inflation and poverty. There is two-way causality between unemployment rate and poverty. There is one-way causality between unemployment rate and inflation rate. From the conclusion, it recommended that since unemployment causes poverty in Nigeria, government should review the education curriculum which will include practical skill acquisition programme in the educational system so as to produce graduates that are employers of labour rather than employment seekers. The government should give incentives to producers to enable them increase domestic production which will bring down price level. Nigerian government should strive to reduce poverty level by formulating and implementing poverty reduction programme like social security which will reduce inflation and unemployment rate and will lead to economic growth.

Suggested Citation

  • Siyan, Peter & Adegoriola, Adewale E. & Adolphus, James Ademola, 2016. "Unemployment and Inflation: Implication on Poverty Level in Nigeria," MPRA Paper 79765, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:79765
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/79765/1/MPRA_paper_79765.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Runkle, David E, 1987. "Vector Autoregressions and Reality," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 437-442, October.
    2. Haug, Alfred A., 1996. "Tests for cointegration a Monte Carlo comparison," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 89-115.
    3. Brigitte Granville, 2006. "Integrating poverty reduction in IMF-World Bank Models," Working Papers id:502, eSocialSciences.
    4. David Romer, 1993. "Openness and Inflation: Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(4), pages 869-903.
    5. By Mohsin S. Khan & Abdelhak S. Senhadji, 2001. "Threshold Effects in the Relationship Between Inflation and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1-1.
    6. David E. Runkle, 1987. "Vector autoregressions and reality," Staff Report 107, Federal Reserve Bank of Minneapolis.
    7. Cuthbertson, K. & Gasparro, D., 1995. "Fixed investment decisions in UK manufacturing: The importance of Tobin's Q, output and debt," European Economic Review, Elsevier, vol. 39(5), pages 919-941, May.
    8. Mohammed Yelwa & Okoroafor O.K.David & Awe, Emmanuel Omoniyi, 2015. "Analysis of the Relationship between Inflation, Unemployment and Economic Growth in Nigeria: 1987-2012," Applied Economics and Finance, Redfame publishing, vol. 2(3), pages 102-109, August.
    9. Runkle, David E, 1987. "Vector Autoregressions and Reality: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 454-454, October.
    10. Ihonvbere, Julius O., 1993. "Economic crisis, structural adjustment and social crisis in Nigeria," World Development, Elsevier, vol. 21(1), pages 141-153, January.
    11. Berthold, Norbert & Gründler, Klaus, 2013. "The determinants of stagflation in a panel of countries," Discussion Paper Series 117 [rev.], Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ebenezer Olamide & Kanayo K. Ogujiuba & Andrew Maredza & Phetole Semosa, 2022. "Poverty, ICT and Economic Growth in SADC Region: A Panel Cointegration Evaluation," Sustainability, MDPI, vol. 14(15), pages 1-15, July.
    2. Egla Mansi & Eglantina Hysa & Mirela Panait & Marian Catalin Voica, 2020. "Poverty—A Challenge for Economic Development? Evidences from Western Balkan Countries and the European Union," Sustainability, MDPI, vol. 12(18), pages 1-24, September.
    3. Abdul Rehman & Laura Mariana Cismas & Ioana Anda Milin, 2022. "“The Three Evils”: Inflation, Poverty and Unemployment’s Shadow on Economic Progress—A Novel Exploration from the Asymmetric Technique," Sustainability, MDPI, vol. 14(14), pages 1-16, July.
    4. Okolo, Chimaobi & Attamah, Nicholas, 2018. "Macroeconomic implications of Raising Income:The Nigerian Experience," MPRA Paper 89640, University Library of Munich, Germany.
    5. Philip Ifeakachukwu Nwosa & Temitope Adebisi Adeoye, 2021. "Globalization And Poverty: Evidence For Lower-Middle Income Country," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 19(1), pages 63-72, May.
    6. Alnaa, Samuel Erasmus & Matey, Juabin, 2022. "Macroeconomic Policy Formulation: The Driver of Economic Welfare in Ghana," MPRA Paper 113041, University Library of Munich, Germany, revised 11 Apr 2022.
    7. Tarek Kacemi & Sallahuddin Hassan, 2018. "Causal Linkage between Inflation and Unemployment: An evidence from the Selected MENA Countries," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 6(1), pages :121-131, March.

    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. Jin, Jang C., 2006. "Openness, growth, and inflation: Evidence from South Korea before the economic crisis," Journal of Asian Economics, Elsevier, vol. 17(4), pages 738-757, October.
    2. Jin, Jang C., 2006. "Can openness be an engine of sustained high growth rates and inflation?: Evidence from Japan and Korea," International Review of Economics & Finance, Elsevier, vol. 15(2), pages 228-240.
    3. Thomas M. Fullerton JR., 2001. "Specification of a Borderplex Econometric Forecasting Model," International Regional Science Review, , vol. 24(2), pages 245-260, April.
    4. Ireland, Peter N., 2004. "A method for taking models to the data," Journal of Economic Dynamics and Control, Elsevier, vol. 28(6), pages 1205-1226, March.
    5. Banu Demirhan, 2016. "Financial Development and Investment Amount Nexus: A Case Study of Turkey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(3), pages 127-134, March.
    6. Jeremy Berkowitz & Lutz Kilian, 2000. "Recent developments in bootstrapping time series," Econometric Reviews, Taylor & Francis Journals, vol. 19(1), pages 1-48.
    7. Ericsson, Neil R & Hendry, David F & Mizon, Grayham E, 1998. "Exogeneity, Cointegration, and Economic Policy Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(4), pages 370-387, October.
    8. Mark Wheeler, 1991. "Causality in the United Kingdom: Results from an Open Economy," Eastern Economic Journal, Eastern Economic Association, vol. 17(4), pages 439-449, Oct-Dec.
    9. Jonathan H. Wright, 2000. "Exact confidence intervals for impulse responses in a Gaussian vector autoregression," International Finance Discussion Papers 682, Board of Governors of the Federal Reserve System (U.S.).
    10. Jose Tavares & Rossen Valkanov, 2001. "The neglected effect of fiscal policy on stock and bond returns," Nova SBE Working Paper Series wp413, Universidade Nova de Lisboa, Nova School of Business and Economics.
    11. James B. Bullard & John W. Keating, 1994. "Superneutrality in postwar economies," Working Papers 1994-011, Federal Reserve Bank of St. Louis.
    12. Jon Faust & John H. Rogers & Eric Swanson & Jonathan H. Wright, 2003. "Identifying the Effects of Monetary Policy Shocks on Exchange Rates Using High Frequency Data," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1031-1057, September.
    13. Cook, David, 1999. "The liquidity effect and money demand," Journal of Monetary Economics, Elsevier, vol. 43(2), pages 377-390, April.
    14. Abbritti, Mirko & Weber, Sebastian, 2010. "Labor market institutions and the business cycle - unemployment rigidities vs. real wage rigidities," Working Paper Series 1183, European Central Bank.
    15. Dovern, Jonas, 2006. "Predicting GDP components: do leading indicators increase predictability?," Kiel Advanced Studies Working Papers 436, Kiel Institute for the World Economy (IfW Kiel).
    16. El-Shagi, Makram & Zhang, Lin, 2020. "Trade effects of silver price fluctuations in 19th-century China: A macro approach," China Economic Review, Elsevier, vol. 63(C).
    17. Edward N. Gamber, 1996. "The policy content of the yield curve slope," Review of Financial Economics, John Wiley & Sons, vol. 5(2), pages 163-179.
    18. Jeff B. Cromwell & Michael J. Hannan, 1993. "The Utility of Impulse Response Functions in Regional Analysis: Some Critical Issues," International Regional Science Review, , vol. 15(2), pages 199-222, August.
    19. Hendry, David F. & Mizon, Grayham E., 2001. "Reformulating empirical macro-econometric modelling," Discussion Paper Series In Economics And Econometrics 104, Economics Division, School of Social Sciences, University of Southampton.
    20. Maria Björklund & Mikael Carlsson & Oskar Nordström Skans, 2019. "Fixed-Wage Contracts and Monetary Non-neutrality," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(2), pages 171-192, April.

    More about this item

    Keywords

    Unemployment; Inflation; Poverty; Vector Auto regressive (VAR) Model;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

    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:pra:mprapa:79765. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.