Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data
Journal of Investment and Management
Volume 4, Issue 5, October 2015, Pages: 180-185
Received: Jul. 19, 2015; Accepted: Aug. 1, 2015; Published: Aug. 12, 2015
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Authors
Richardson Kojo Edeme, Department of Economics, Faculty of Social Science, University of Nigeria, Nsukka, Enugu State-Nigeria
Innocent Ifelunini, Department of Economics, Faculty of Social Science, University of Nigeria, Nsukka, Enugu State-Nigeria
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Abstract
The inter-relationship among savings, inflation and economic growth is an important conjuncture in the linkage evaluation of economic performance. Towards making them sustainable, the Nigeria government has initiated reforms, some of which in the last seven years. Despite these reforms, no study has been undertaken on the linkages among these variables with existing studies having confided themselves to looking only at the relationship between inflation and investment and the impact of inflation and economic growth. Using annual time series data from 1980-2013, this study examined the linkages among savings, inflation and economic growth in Nigeria using the 2-stage least squares (2SLS) method. The study found inflation and real interest to be negatively related with economic growth while exchange rate has positive effect on economic growth. Also economic growth, unemployment and real interest rate negatively affected inflation rate, while indirect taxes had positive impact on inflation. The result further shows that economic growth; exchange rate and foreign direct investment engender savings while depreciation rate endangers savings. The study also established threshold level of 8 percent of inflationary level was found to be consistent with Nigeria growth; beyond this point inflation will endanger growth
Keywords
Savings, Inflation, Economic Growth, Investment, Interest Rate, 2-Stage Least Squares
To cite this article
Richardson Kojo Edeme, Innocent Ifelunini, Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data, Journal of Investment and Management. Vol. 4, No. 5, 2015, pp. 180-185. doi: 10.11648/j.jim.20150405.16
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