INFLATION AND ECONOMIC ACTIVITIES IN NIGERIA

Thesis Overview

<p>INTRODUCTION<br><br>1.1BACKGROUND<br><br>Inflation can be defined as the persistent or continuous increase in the general price level Mr. Thoney Croft former chancellor of the exchequer (minister of finance) focuses defined inflation “too much money chasing few goods” for about three decades now, inflation is a hydro-head problem that is so difficult to eliminate in Nigeria. Infact it has been a topic of major debate among economist in Nigeria and elsewhere. Inflation is now a universal phenomenon on both in the developed and less developed countries. There is a rapid and persistent rise in the cost of living and inflationary pressure now pose the greatest danger to economic growth and development. In Nigeria the economic sector has been worst affected by the scourge of inflation.<br><br>On the other hand, some argued and empirically demonstrated that inflation stimulates investment and growth (Keynessa and Osakwe) 1936:1982) they see inflation as a natural consequence of economic development and that much price increase are necessary for economic growth especially in developing countries. Therefore, since the real relationship between real output and inflation is controversial the primary aim of this paper is to examine the relationship statistically using recent data in Nigeria. Bearing in mind the effect of inflation and its implication in our economy, it became necessary to study the exact relationship between inflation and economic activities in Nigeria. &nbsp; <br><br>1.2 STATEMENT OF THE PROBLEM<br><br>As stated in the previous section, this relationship between inflation and real output is controversial. The effects of inflation in the economy is infact unknown while some economist believe that inflation reduces the level of real output in Nigeria distorts expectation and so on. Other economists argue that inflation stimulate investment and growth. It is based on this controversy that the study seek to highlight statistically the relationship between inflationary experience and economic growth in Nigeria. <br></p>