CAUSES OF INFLATION IN SOME AFRICAN COUNTRIES: Evidence from using an error correction method for Nigeria


The paper examines the causes of inflation in few African countries using an Error Correction Method for Nigeria between 1970 and 2000. The paper uses government current expenditure, inflation rate, ratio of government deficits to Gross Domestic Product, and total money supply as the analytical variables. Using an econometric analysis of time series data, and testing for unit root, co-integration and error correction modeling, the evidence from the regression results shows that the major cause of inflation in Nigeria over the years is government increased budget deficits. Surprisingly, other factors do not have the same significant impact 0)1 inflation in Nigeria.

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