ABSTRACT

The study investigated the impact of Inflation and interest rate on economic growth in Nigeria. The objective of this study is to determine the impact of inflation and interest rate on Nigeria economic growth. For the data, annual time series data were obtained from the Central Bank (CBN, 2022) Statistical Bulletin, and the World Development Indicator (WDI, 2022) for the period 1981 to 2022 on the variables used for the study. Unit root test was conducted using Augmented Dickey-Fuller test technique and the result showed that the variables were stationary though at first difference and the ARDL technique was carried out. Co-integrated test was also conducted using Johansen co-integration test method and the result showed that the variables in the model are co-integrated meaning that the variables have a long run relationship. The coefficient on ECM (-1) is negative and statistically significant, which suggests that the model is correcting for errors in the previous period. The study conclusively revealed that for the first objective, there is a significant relationship between inflation and economic growth while for the second objective, the is no causality effect between interest rate and economic growth.