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Impact of Inflation Rate and Exchange Rate Fluctuations on Economic Growth in a Developing Nation

IDORO, Dumebi & Prof. Victor Chukwunweike EHIEDU

Abstract

This study examined the impact of inflation and exchange rate fluctuations on economic growth in developing nation for the period of 1986-2022 (37years). Data for the study was obtained from CBN Statistical Bulletin and CBN Annual Report. The inflation [proxied with Inflation Rate (INFLR), Consumer Price Index (CPI) and Producer Price Index (PPI)] with and exchange rate fluctuations [proxed with Exchange Rate (EXCHR), Exchange Rate Fluctuations (EXCHRF) and Trade Balance (TB)] intertwine to affect the economic growth [proxied with Real Gross Domestic Product (RGDP)] of Nigeria. Data was analyzed using the descriptive statistics and correlation matrix. In this work, the unit root test, ARDL Bound Co-integration test, and ARDL Co-integrating and Long form were utilised as via Econometric Views version 9.0. The findings revealed that INFLR has a p-value of 0.3324 on the short run and a p-value of 0.3766 on the long run, respectively. This suggests that both in the short and long terms, INFLR has no significant impact on RGDP in Nigeria; On the short- and long-term, respectively, p-values for CPI are 0.4763 and 0.4500. This suggests that CPI has no significant short- and long-term impact on RGDP in Nigeria; In terms of the short and long runs, PPI has p-values of 0.5634 and 0.5183, respectively. This suggests that both in the short and long terms, PPI has no significant impact on Nigeria's RGDP; On the short- and long-term, respectively, EXCHR had p-values of 0.9136 and 0.9148. This suggests that EXCHR's impact on Nigeria's RGDP, both in the short and long terms, is no not significant; on the short- and long-term, EXCHRF exhibits p-values of 0.8346 and 0.8311, respectively. This suggests that EXCHRF has no significant impact on RGDP in Nigeria over the long and short terms and in both the short and long runs, TB exhibits p-values of 0.6805 and 0.6620. This suggests that TB has no significant short and long-term impact on Nigeria'

Keywords

Inflation Exchange Rate Fluctuations. Economic Growth and Developing Nation

References

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