Interest Rate and Inflation Nexus: ARDL Bound Test Approach

The paperestimates the impact of interest rate on inflation in Nigeria. The study makes used of Autoregressive Distributed Lag model (ARDL) on time series Data, for the period 1970-2016. The data set on inflation, money supply, interest rate, GDP per capita and exchange rate were tested for stationary using ADF, PP and KPS tests and established stationarity at I (1) for all the variables. ARDL testresults reveal that interest rate is inflationary in both the short-run and long-run as it positively and significantly influencing inflation in the two periods which is in conformity with the arguments of the fiscal policy supporters but contradict the arguments of the monetary policy supporters. The findings of the study imply that interest rate in Nigeria is inflationary. Meaning that increase in the rate of interest rate will lead to an increase inflation rate. Therefore, the research study conclude that interest rates should be adjusted with caution, and also implies that fiscal policy measure will be very effective in converting inflation in the country. Keywords:ARDL Bound Test, Interest Rate, Inflation, Exchange Rate, Fiscal Policy, Monetary Policy. DOI: 10.7176/JESD/10-20-07 Publication date:October 31st 201

Impact of Foreign and Domestic Investments on Economic Growth in Nigeria: An Application of ARDL Approach

This paper investigates the relationship between economic growth, domestic and foreign investments in Nigeria for the 1981-2018 periods. The properties of time series variables were examined through the application of Augmented Dickey-Fuller technique and Autoregressive Distributed Lag approach in testing the long-and-short runs relationship. The results of unit root suggest that four variables in the model were stationary at first difference while one is stationary at level. The results of the main model revealed that foreign investment has positive impact on economic growth in the long-and-short runs, domestic investment has negative impact on economic growth in both long-and-short runs and trade openness impacted positively on economic growth in Nigeria. Therefore, this paper recommends that concerted effort should be made by government, policy makers and relevant authorities to formulate policies aim at creating a conducive investment environment so that Nigerians and non-Nigerian investors will be encourage to increase their propensity to invest in the country. Policy makers should also take step to ensure foreign exchange stability and improve trade openness so as to achieve meaningful economic growth