IMPACT OF UNEMPLOYMENT AND INFLATION ON ECONOMIC GROWTH: AN EMPIRICAL INVESTIGATION

Abstract

The paper investigates the impact of unemployment and inflation on economic growth in Nigeria. Ordinary Least Square (OLS) technique is used to estimate the impact of unemployment and inflation on growth, and the Johansen cointegration test is employed to examine the existence of a long-run relationship between economic growth and the independent variables.

The findings show the existence of a long-run relationship between economic growth, unemployment, and inflation. The results also reveal that unemployment negatively impacts economic growth, while inflation rate positively impacts economic growth.

This implies that a good performance of the Nigerian economy in terms of growth may be achieved with low rates of unemployment and inflation in the country. Hence, a major policy implication is that concerted effort should be made to reduce unemployment and stabilize the prices of goods and services (inflation) to achieve high, rapid, and sustained economic growth in Nigeria.