Analysis of The Impact of Inflation Reduction on Output and Unemployment in Nigeria

Abstract

It has been enunciated that it is possible to reduce the size of the sacrifice ratio in an economy without a corresponding increase in the rate of inflation. Besides, for the Nigerian economy, there are issues relating to the inflationoutput relationship, among which is how inflation inertia impacts on output and unemployment. It is therefore apt to ascertain what Nigeria's sacrifice ratio could be after many successful inflation reductions over the years. Adopting the Instrumental Variables Generalized Method of Moments (IV-GMM) technique and using data from1970-2015, the findings suggest that inflation inertia has a significant negative impact on the actual rate of inflation in Nigeria. It was also revealed that the percentage of a year's real GDP that must be forgone to reduce inflation by 1 percent in Nigeria is 5.1 while 53.6 percent of output was sacrificed in 1982. Equivalently, a sacrifice of 26.6 percent of cyclical unemployment was made in the same year; while the highest percentage of GDP was sacrificed in 1990 and the lowest in 2007.

Menalar Indikator yang Berkorelasi Terhadap Penerapan Tax Haven

“…Lev (2001) menjelaskan bahwa aset tidak berwujud adalah klaim atas keuntungan masa depan yang tidak memiliki bentuk yang terlihat, misalnya, sebagai paten, yang di masa depan mempengaruhi pembentukan nilai perusahaan. Penjelasan ini didukung oleh Miller dan Whiting (2005) yang mengungkapkan bahwa aset tidak berwujud merupakan aset penting yang menguntungkan bagi perusahaan di masa depan (Edeme et al 2018).…”

Structural estimates of the South African sacrifice ratio

“…According to the findings, estimates of the SR have steadily increased during the periods of monetary policy expansion and fallen during the periods when contractionary monetary policy was adopted, and average SR estimates of 2.8 during the time of expansion and 2.3 in times of contraction phase were found. Edeme et al (2018) analysed the impact of inflation reduction on output and unemployment for the Nigerian economy for the period 1970-2015 by adopting the Instrumental Variables Generalized Method of Moments (IVGMM). Their findings indicate that inflation inertia is negatively and significantly related to the actual rate of inflation in Nigeria.…”