The Main Determinants of Inflation in Nigeria

June 1, 1994

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Format: Chicago

Gary G. Moser The Main Determinants of Inflation in Nigeria, (USA: International Monetary Fund, 1994) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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.

Subject: Consumer price indexes, Exchange rates, Foreign exchange, Inflation, Monetary base, Money, National accounts, Personal income, Prices

Keywords: Consumer price indexes, Contractionary fiscal policy, CPI variable, Currency terms, Exchange rates, Inflation, Inflation development, Inflation equation, Monetary base, Monetary policy stance, Nigeria inflation, Personal income, Rate of inflation, Rate of inflation in Nigeria, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/076
Stock No:

WPIEA0761994
ISBN:

9781451849806
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 42, No. 2, June 1995.

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