ABSTRACT
The study examines the impact of inflation on economic growth of Nigeria. Other micro economic variable tested along with inflation in this study are Agriculture, manufacturing, and trade. In analyzing the data the simple percentage method was applied the empirical results demonstrated that there is a positive relationship between the dependent variable (agriculture and trade) and explanatory variable except in manufacturing.
The relationship between inflation and economic growth is one, which many economists have watched with keen interest. Producers in the production sector cash on this phenomenon to make a brisk business sat the expense of fixed income earners. This informs the increase in turnover in inflationary periods. Money economy gave rise to inflation, which reduces the living standard of the people and the level of saving dwindles in turn. The effect on economic growth is dependent on the level of economic activity going on. If there are more producers, there are likely to be an increase in the level of economic growth vice versa.
In all, inflation do not wish any economy well, so should be eradicated by a deliberate effort. Nigeria has intellectuals that are capable of formulating good monetary and fiscal policies that will benefit her. Aside economic viewpoint, inflation devastates social, health and educational, infrastructure, it should be discouraged in our system.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background to the study
1.2 Statement of problems
1.3 Purpose of study
1.4 Scope of study
1.5 Limitation of study
1.6 Definition of terms
1.7 The significance of study
CHAPTER TWO
2.0 Definition/General review
2.1 Types of inflation
2.2 Causes of various types of inflation
2.3 Adverse effects of the various types of inflation
2.4 Inflation in Edo State
2.5 Effect of inflation in the locality
2.6 Model adopted in controlling inflation
CHATTER THREE
3.0 Methodology
3.1 Research instruments/models
3.2 Sampling of study
3.3 Sampling techniques
3.4 Graphical Illustration of data
3.5 Analysis of data
3.6 Efficiency/deficiency of data
CHAPTER FOUR
4.0 Presentation and analysis of data
4.1 presentation of analysis
CHAPTER FIVE
5.0 Summary
5.1 Recommendation
5.2 Conclusion
REFERENCE
QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
The word inflation rings a bell in the market economics of the world. It is a monster that threatens all economics because of its undesirable effects. The problem of inflation surely is not a new phenomenon. It has been a major problem in the country over the years. Inflation is defined as a generalised increase in the level of price sustained over a long period in an economy (Lipsey and Chrystal, 1995). Inflation is a household word in many market oriented economics. Although several people, producers, consumers, professionals, non-professionals, trade unionists, workers and the likes, talks frequently about inflation particularly if the malady has assumed a chronic character, yet only selected few knows or even bother to know about the mechanics and consequences of inflation.
After an appreciable economic performance in the early 1970s, the Nigeria economy witnessed some anxious moment in the late 1970s to mid 1980s. Severe pressures built up in the economy mainly because of the expansionary fiscal policy of the federal government during these years. This was accompanied by high monetary expansion as the huge government deficit was financed largely by the Central Bank of Nigeria. This was exacerbated by the transfer of government sector deposits to the banks and the resultant increase in their free reserves with adverse consequences on the general price level. The inflationary pressure was further aggravated by high demand for imports of both intermediate inputs and consumer goods due to over valuation of the naira which made imports relatively cheaper than locally manufactured goods. In this case, the impediments to development may be referred to as cost. Economics theory, however, postulates that for the profit to be maximised, cost should be minimised. One of the main cost is inflation, which has turned into a canker worm eating deep into the nation’s path of economic progress. However, as fiscal discipline was restored in the second half of 1999, the pressures on the exchange rate and domestic prices moderated significantly. The economy faced renewed pressures and some uncertainty towards the end of the year as the C.B.N gradually relaxed its tight monetary policy.
Undoubtedly one of the macroeconomic goals which the government strives to achieve is the maintenance of stable domestic price level. This goal is pursued in order to avoid cost of inflation or deflation and the uncertainty that follows where there is price instability (Salam et al, 2006). The effects of inflation on economic growth will be examined bearing in mind that a country will grow faster in real terms if inflation is reduced to a barest minimum. Perhaps it should be mentioned here that inflation is not incompatable with growth.