Inflation and Economic Growth Nexus under Monetary Policy Control: The Case of Nigeria

Jude M. Awuna, Marina Yu. Malkina

National Research Lobachevsky State University of Nizhni Novgorod, Nizhny Novgorod, Russia

Abstract

Modern research shows that there is a complex two-way relationship between inflation and economic growth. It also confirms that there is a turning point beyond which inflation, rather than acting as a stimulant to economic growth, becomes its constraint. This study examines the net impact of inflation on Nigeria's economic growth over the period 1980 to 2023, taking into account the impact of monetary policy tools. The study used a set of methods: descriptive statistics, unit root test, a method for selecting the lag length, constructing an ARDL model, and conducting appropriate diagnostic tests. The data source was the archives of the World Bank and Central Bank of Nigeria. The result of the pairwise Granger Causality analysis revealed a one-way causality from inflation to economic growth. All variables were found to be stationary at first difference, paving the way for an ARDL bounds test for co-integration, which in turn showed that there is no long-run relationship between the variables. The estimated ARDL model showed that the inflation rate had a significant short-term negative impact on economic growth in Nigeria during the period under review. At the same time, the growth of the money supply, being a pro-inflationary factor, had a significant positive impact on economic growth in the short term in Nigeria. On the contrary, the rise in interest rates, which is an element of the restrictive anti-inflation policy, had a significant negative impact on economic growth in the short term. This means that a combination of economic policy tools can successfully address the problem of achieving a compromise between its two main objectives.

Keywords

inflation; economic growth; gross domestic product; nexus; auto regressive distributed lag; Granger causality.

JEL classification

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About Authors

Jude Msonter Awuna

Post-Graduate Student, Institute of Economics, National Research Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russia (603022, Nizhny Novgorod, Gagarin Avenue, 23); ORCID orcid.org/0009-0002-4835-1945 e-mail: awuna.jude@uam.edu.ng

Marina Yurievna Malkina

Doctor of Economics, Professor, Department of Economic Theory and Methodology, Institute of Economics, National Research Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russia (603022, Nizhny Novgorod, Gagarin Avenue, 23); ORCID orcid.org/0000-0002-3152-3934 e-mail: mmuri@yandex.ru

For citation

Awuna, J.M., Malkina, M.Yu. (2026). Inflation and Economic Growth Nexus under Monetary Policy Control: The Case of Nigeria. Journal of Applied Economic Research, Vol. 25, No. 1, 163-185. doi.org/10.15826/vestnik.2026.25.1.006

Article info

Received November 15, 2025; Revised December 29, 2025; Accepted December 31, 2025.

DOI: http://dx.doi.org/10.15826/vestnik.2026.25.1.006

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