The Main Determinants of Inflation in Nigeria
Summary:
This paper provides a selective review of the literature on the determinants of inflation in Nigeria, analyzes the dominant factors influencing inflation, presents the empirical results of a reduced-form elasticities model, and discusses the policy implications of the empirical results. The results of this analysis confirm the basic findings of earlier studies, namely that monetary expansion, driven mainly by expansionary fiscal policies, explains to a large degree the inflationary process in Nigeria. Other important factors are the devaluation of the naira and agroclimatic conditions. With respect to the depreciation of the naira, it was found that concurrent fiscal and monetary policies had a major influence on its impact on inflation. Given the considerable role of food commodities in the CPI, agroclimatic conditions (rainfall) were found to play a significant role in overall movements in prices and should be fully taken into consideration in any analysis of the inflationary process in Nigeria.
Series:
Working Paper No. 1994/076
Subject:
Consumer price indexes Exchange rates Foreign exchange Inflation Monetary base Money National accounts Personal income Prices
Notes:
Also published in Staff Papers, Vol. 42, No. 2, June 1995.
English
Publication Date:
June 1, 1994
ISBN/ISSN:
9781451849806/1018-5941
Stock No:
WPIEA0761994
Pages:
28
Please address any questions about this title to publications@imf.org