Function with ordinary least square method and

Info icon This preview shows pages 4–5. Sign up to view the full content.

View Full Document Right Arrow Icon
function with ordinary least square method and concluded that inflation posses a positive impact on economic Growth, secondary annual data from 1973-2010 was used to derive the conclusion. Osuala, (2013) carried out an empirical study on the impact of inflation on economic growth over a period of thirty-one years. The VAR results revealed a statistically significant positive impact of inflation on economic growth in Nigeria while the causality test shows that there is no causality in between the two variables. In the same vein, Taiwo (a), (2011) investigated the impact of inflation and investment on economic growth in Nigeria with the use of ordinary least square ( OLS ) method and annual secondary data from 1981- 2006, the investigation based on inflation- GDP revealed that inflation has negative and significant impact on economic growth, meaning that as inflation increases economic growth falls. In a more elaborate study, Ogunmuyiwa et al ., (2010), carried out an analyzes of the nexus between money supply, inflation, interest rate and economic growth, in Nigeria over a period of 1980-2006, using co- integration and vector error correction technique. The result revealed that money supply exerts an insignificant positive impact on GDP; while interest rate is observed to be positively and significantly related to economic growth. However, no causality was found to exist between the variables in both the short and long run. Similarly, Adesoye, (2012) examined the causality between price, monetary aggregate and real output in Nigeria from the period 1970 to 2009 using the inflationary gap model that emanates from the quantity theory of money. The econometric findings suggest that output gap was strong indicators of controlling monetary aggregate in Nigeria, which indicates positive impact of money supply on economic growth. Contrary to the work of Ogunmuyiwa et al ., (2010), on the nexus between inflation and economic growth in Nigeria, Omoke, (2010), using secondary data from 1970-2005, the result shows that inflation has positive impact on economic growth and causality is discovered to be running from Inflation to economic growth. IV. Methodology 4.1 Source of Data Annual time series data covering 1973-2013 were used, the data were sourced from world Bank Data Bank, Central Bank of Nigeria ( CBN ) publications; National Bureau of Statistics (Various Issues). The period chosen for the study encompasses the period of major reforms in Nigeria’s economic history (Pre and Post SAP Eras). Equally, the period marked the era in which Nigeria currency was changed from pound to Naira in 1973 with its economic implication on price volatility. 4.2 Model Specification and Variable Measurement Different factors have been identified to be responsible for changes in economic growth (Output). Based on the theoretical exposition and following the extant literatures as evidenced in the works of Mishra, et al ., (2010), Ogunmuyiwa et.al (2010) and Taiwo (2012), the Vector Error Correction Model (VECM) is used in the present study. In line with Engle and Granger [YR], there exist both short-run and long-run parameters in VECM once the variables are co-integrated of the order 1(1). Hence, the short-run analysis of the system should
Image of page 4

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern