Project Topic:

The effect of inflation and interest rate on economy growth in Nigeria

Project Information:

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 70 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   1,527 people found this useful

Project Department:

ACCOUNTING UNDERGRADUATE PROJECT TOPICS, RESEARCH WORKS AND MATERIALS

Project Body:

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Rapid output growth and low inflation are the most common objectives of macroeconomic policy in both developed and developing economies. In Nigeria, the formulation and implementation of monetary policy by the Central Bank of Nigeria (CBN) was aimed at maintaining price stability which is consistent with the achievement of sustainable economic growth. The monetary authority strives to achieve the governments overall inflation objective through effective monetary management, which entails setting intermediate and operating targets in tandem with the assumed targets for GDP growth, inflation rate and balance of payments.

The growing interest in price stability as a major goal of monetary policy is an acknowledgement of the observed phenomenon that high inflation disrupts the smooth functioning of a market economy. High inflation is known to have many adverse effects: it imposes welfare costs on the society; impedes efficient resource allocation by obscuring the signaling role of relative price changes; discourages savings and investment by creating uncertainty about future prices; inhibits financial development by making intermediation more costly; hits the poor excessively, because they do not hold financial assets that provide a hedge against inflation; and reduces a countrys international competitiveness by making its exports relatively more expensive, thus impacting negatively on the balance of payments, and perhaps more importantly, reduces long-term economic growth (See Ghosh and Phillips, 1998; Khan and Senhadji, 2001; Billi and Khan, 2008; Frimpong and Oteng-Abayie, 2010). Overall, businesses and households are thought to perform poorly in periods of high and unpredictable inflation, Barro (1996).

Most policymakers, however, agree that they should not allow inflation to fall below zero because the costs of deflation are thought to be high, Billi and Khan (2008). Even though some evidence suggests that moderate inflation helps in economic growth, Mubarik (2005), the overall weight of evidence so far clearly indicated that inflation is inimical to growth. Consequently, policymakers should aim at a low rate of inflation that maximizes general economic well-being.

A considerable amount of literature examining the relationship between inflation and economic growth in both developed and developing economies are available. However, several of those studies focused specifically on whether the relationship between inflation and long-run growth is negative and a nonlinear one – positive or nonexistent relationship at low rate of inflation but becomes negative at higher rates, see Fischer (1993) who first identified the relationship. If such a nonlinear relationship exists, then it should be possible, in principle, to estimate the inflexion point, or a threshold, at which the sign of the relationship between the two variables would switch. Consequently, Khan and Senhadji (2001) produced the threshold level for both developed and developing countries in a cross-country panel data framework. The authors arrived at a threshold level range of 11 - 12 per cent for developing countries, including Nigeria. Even though cross-country studies were justified based on their ability to generalize empirical findings, specific country studies can provide specific evidence relevant for the country under study, as Kremer et al. (2009) suggested that inflation threshold in non-industrial countries and the appropriate level of inflation target might be country-specific. This becomes necessary due to heterogeneous factors obtainable in different countries. Although Chimobi (2010) examined the relationship between inflation and growth in Nigeria, no attempt was made to provide an optimal inflation rate for policy decisions. Fabayo and Ajilore (2006) arrived at a threshold level of 6 per cent for Nigeria using annual data from 1999 – 2013. However, Bruno and Easterly (1998) argue that the negative relationship between inflation and growth, typically found in cross-country regressions, exists only in high frequency data and with extreme inflation observations, which Khan and Senhadji (2001) confirmed that the extent of the relationship is stronger at high frequencies.

1.2 Statement Of Problem

The effect of inflation and interest rate on economy growth in Nigeria is quite a serious problem. The country experiences on inflation is no longer the problem but the fact that inflation problem seems to have reached the crisis dimension. Changes in interest rate determines the rate of inflation. The nominal interest rate is a function of the real interest rate and inflationary expectation.

Since independence, we have been suffering from inflation and interest rate till central bank interned their new system abolished all control on interest rate and allow banks to fix their own interest rate.

1.3 Objective of the study

This research work titled “Inflation on economic growth of Nigeria: implication for gross National product 1999 – 2013” the specific objectives of this research work includes the following:

1.  To examine the effect of inflation rate on the economic growth of Nigeria.

2.  To identify the implication of inflation on the gross national product from 1999 to 2013.

3.  To evaluate the relationship between inflation and economic growth and development of Nigeria.

4.  To examine the inflation rate at which inflation has affected on the gross national product of Nigeria.

1.4 Research Question

1.  To what extent has inflation rate affected the economic growth of Nigeria?

2.  What are the implications of inflation on the gross national product from 1999 to 2013?

3.  Is there any relationship between inflation and economic growth and development of Nigeria?

4.  To what extent has inflation rate affected on the gross national product of Nigeria?

1.5 Research Hypothesis

The researcher formulated the following research hypothesis:

Ho: Inflation rate has no effect on the economic growth of Nigeria from 1999 to 2013.

H1: Inflation rate has affected the economic growth of Nigeria from 1999 to 2013.

Ho: Inflation has no implication on the gross national product of Nigeria from 1999 to 2013.

H1: Inflation has so many implications on the gross national product of Nigeria from 1999 to 2013.

Ho: There is no significant relationship between inflation and economic growth and development of Nigeria.

H1: There is significant relationship between inflation and economic growth and development of Nigeria.

Ho: Inflation has not affected the gross national product of Nigeria from 1999 to 2013.

H1: Inflation has affected the gross national product of Nigeria from 1999 to 2013.

Get the complete project »


Instant Share On Social Media:


Can't find what you are looking for?
Call (+234) 07030248044.

OTHER SIMILAR ACCOUNTING PROJECTS AND MATERIALS

AN APPRAISAL OF THE IMPLICATION OF ELECTRONIC BANKING IN NIGERIA BANKS (A CASE STUDY OF ACCESS BANK)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 67 ::   Attributes: Secondary data, Data Analysis,Abstract  ::   22162 engagements

CHAPTER TWO REVIEW OF RELATED LITERATURE Electronic banking in Nigeria has overtime been viewed by many especially economists as having a lot of implications on the economy of Nigeria and especially...Continue reading »

A CRITICAL ANALYSIS OF THE USE OF FINANCIAL STATEMENTS IN ASSESSING THE PERFORMANCE OF AN ORGANIZATION (A CASE STUDY OF FIRST BANK NIGERIA)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 75 ::   Attributes: Questionnaire, Data Analysis, Abstract  ::   20484 engagements

ABSTRACT The study was carried out to analyse how an organization performs making use of the financial statements with First Bank of Nigeria Plc serving as the case study. the study disclosed that th...Continue reading »

AN EVALUATION OF THE PERFORMANCE OF NIGERIAN STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIA ( A CASE STUDY OF NIGERIAN STOCK EXCHANGE)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 78 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   9940 engagements

HISTORICAL BACKGROUND OF THE NIGERIA STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIAN. The nigeria stock excahnge denoted by NSE is a government establishment where stocks are traded on a daill...Continue reading »

APPLICATION OF BUDGETS AND BUDGETARY CONTROL MEASURES IN A NON-PROFIT ORGANIZATION: A CASE STUDY OF APOSTOLIC CHURCH, DELTA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 76 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   13727 engagements

2.1 CONCEPTUAL FRAMEWORK A budget is can be defined by accountants as “a planned outcome to be generated and for the expenditure to ensure during that period and the capital to be employed to a...Continue reading »

ASSESSING BOOK-KEEPING PRACTICES OF SMALL AND MEDIUM SCALE ENTERPRISES IN CALABAR LOCAL GOVERNMENT AREA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 69 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   12304 engagements

ABSTRACT The economy of Nigeria cannot function properly or thrive without the micro, small and medium scale enterprises (SMEs). These small scale enterprises cannot function properly if they are not ...Continue reading »

ASSESSMENT OF ADEQUATE RISK RECOGNITION AND MANAGEMENT IN NIGERIAN INSURANCE COMPANIES (A CASE STUDY OF UNION ASSURANCE COMPANY, UYO)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 86 ::   Attributes: Questionnaire, Data Analysis  ::   8026 engagements

THE CONCEPT OF RISK Risk has been the subject of study by different scholars over the years with several meaning and definitions. But the most accepted definitions are that of J.E Banister and P.A Baw...Continue reading »

What are looking for today?

WHAT OUR CUSTOMERS ARE SAYING:
  • 1. Asad from Kardan said "useful information, thank you.".
    Rating: Very Good
  • 2. Mwanasinjale Bruno Y. from Catholic University College Of Mbeya (CUCoM) said "Conglatulation to all supporters of the project clue. For what your doing has great impact to the society".
    Rating: Excellent
  • 3. Agaji Gabriel from Federal University of Agriculture Makurdi said "Projectclue is the best for free research topics and material. Kudos to you guy.".
    Rating: Very Good
  • 4. Abiola Adesanya from University Of Lagos Nigeria said "The best portal for undergraduate research projects and free project topics in Nigeria. Kudos to you guys! Project Clue".
    Rating: Very Good
  • 5. Dabung Timothy from University of Jos said "The effect of job stress on employees performance".
    Rating: Excellent
  • 6. Elkanah Umma from Ahmadu Bello University Zaria said "I had wonderful working experience from you guys. Your side is perfect for research! Keep helping the customers.".
    Rating: Very Good