MACROECONOMIC PROBLEMS CHALLENGING THE NIGERIAN ECONOMY: A CASE STUDY OF THE RELATIONSHIP BETWEEN UNEMPLOYMENT AND INFLATION

Abstract

Unemployment and inflation are among the macroeconomic problems challenging the Nigerian
economy. Economists and researchers have been in search for the relationship between
unemployment and inflation to find solutions to these problems. In furtherance of these efforts,
this study aimed to investigate the relationship between unemployment and inflation in Nigeria
from 1981 - 2022. The model specified has unemployment as the dependent variable and inflation
rate, Interest rate, gross domestic product and exchange rate as the independent variables. The
study employed the Autoregressive Distributed Lag (ARDL) Model in the estimation of the
specified unemployment-inflation model. The estimated model results obtained exceed 5% level of
inflation significant coefficient showing that inflation had a negative and significant impact on
unemployment The first and second lags of unemployment had a positive and negative significant
relationship respectively with the current unemployment as both passed the significance test at
the 1% level. The granger causality test showed that there was no causality between
unemployment and inflation in Nigeria during the period of the study. In view of the results
obtained, we recommend friendly economic policies implementation with the aim of improving
economic growth in Nigeria.