The Impact of Inflation on Private Consumption Expenditure and Economic Growth in Nigeria

TABLE OF CONTENTS

Title page……………………………………………………………………………… i

Approval page………………………………………………………….......................... ii

Certification…………………………………………………………………………… iii

Dedication…………………………………………………………................................ iv

Acknowledgement……………………………………………………………................. v

Table of Contents…………………………………………………………….................. vi

List of Tables…………………………………………………………………………… viii

Abstract………………………………………………………………………................. ix

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study …………………………………………………………… 1

1.2 Statement of the Problem………………………………….......................................... 2

1.3 Research Questions ……………………………………………………………………… 4

1.4 Objective of the Study…………………………………………………………………… 4

1.5 Research Hypothesis …………………………………………………………………… 5

1.6 Significance of the Study…………………………………………………..…………… 5

1.7 Scope of the Study ……………………………………………………………………… 6

CHAPTER TWO: LITERATURE REVIEW

2.1 Conceptual Framework…………………………………………………………………… 7

2.1.1 The concept of inflation………………………………………………………………… 7

2.1.2 Private consumption expenditure……………………………………………………… 8

2.1.3 Economic growth……………………………………………………………………… 8

2.2 Theoretical literature……………………………………………………………………… 9

2.2.1 The Keynesian Theory of Inflation …………………………………………………… 9

2.2.2. Modern Theory of Inflation ………………………………………………………… 10

2.2.3. Keynesian Theory …............................................................................................. 12

2.2.4. Endogenous Growth Theory ………………….………………………….………… 13

2.2.5. Monetary Theory …………………………………………………………………… 14

2.3 Empirical Literature ……………………………………………………………………… 15

2.3.1 Foreign Evidence ……………………………………………………………………… 15

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2.3.2 Nigerian Evidence ……………………………………………………………………… 20

2.4 Summary of Literature and Value Added ……………………………………………… 22

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Theoretical framework...........................................................................................................25

3.2 Model Specification…………………………………………………………………… 26

3.3 Estimation Technique …………………………………………………………………… 28

3.3.1 Data, Sources and Software………………………………………………………… 28

3.3.2 Stationary Test…………………………………………………………………… 29

3.3.3 Co-integration Test……………………………………………………………… 30

3.3.4 The Vector Error Co- integration Mode…………………………………………………… 30

3.3.5 VEC Granger Causality…………………………………………………………… 31

CHAPTER FOUR: RESULT PRESENTATION AND ANALYSES

4.1 Unit Root Test Results……………………………………………………………… 33

4.2 Johansen Cointegration Test Result……………………………………………………… 34

4.3 lag Length Selection Criteria……………………………………………………………… 36

4.4 VECM Estimated Result…………………………………………………………………… 37

4.5 VEC Granger Causality Result......................................................................................... 41

4.6 Impulse Response Analysis......................................................................................... 44

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary…………………………………………………………………………… 48

5.2 Conclusion………………………………………………………………………………… 48

5.3 Recommendation…………………………………………………………..………… 49

5.4 Suggestions for Further Study……………………………………………………… 50

References …………………………………………………………………………….. 51

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