Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data

Richardson Kojo Edeme; Innocent Ifelunini

doi:doi:10.11648/j.jim.20150405.16

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Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data

Richardson Kojo Edeme, Innocent Ifelunini

Published in Journal of Investment and Management (Volume 4, Issue 5)

Received: 19 July 2015 Accepted: 1 August 2015 Published: 12 August 2015

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Abstract

The inter-relationship among savings, inflation and economic growth is an important conjuncture in the linkage evaluation of economic performance. Towards making them sustainable, the Nigeria government has initiated reforms, some of which in the last seven years. Despite these reforms, no study has been undertaken on the linkages among these variables with existing studies having confided themselves to looking only at the relationship between inflation and investment and the impact of inflation and economic growth. Using annual time series data from 1980-2013, this study examined the linkages among savings, inflation and economic growth in Nigeria using the 2-stage least squares (2SLS) method. The study found inflation and real interest to be negatively related with economic growth while exchange rate has positive effect on economic growth. Also economic growth, unemployment and real interest rate negatively affected inflation rate, while indirect taxes had positive impact on inflation. The result further shows that economic growth; exchange rate and foreign direct investment engender savings while depreciation rate endangers savings. The study also established threshold level of 8 percent of inflationary level was found to be consistent with Nigeria growth; beyond this point inflation will endanger growth

Published in	Journal of Investment and Management (Volume 4, Issue 5)
DOI	10.11648/j.jim.20150405.16
Page(s)	180-185
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Savings, Inflation, Economic Growth, Investment, Interest Rate, 2-Stage Least Squares

References

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[2]	Akerlof, G. W, T. Dickson and I.P George (2006), “The Macroeconomics of Low Inflation”, Brookings Paperon Economic Acivities, Vol. 1
[3]	Barro, R.J (1995), “Inflation ane Economic Growth”, Working Paper, 5326, Nation Bereau of Economic Research
[4]	Bruno and William (2012), “Inflation and Long-run Growth”, NBER Working Paper No: 5209 (Cambridge, Massachusetts, National Bureau of Economic Reearch)
[5]	Chung, C, L. Chung and Y. Zhang (1995), “The Role of Foreign Direct Investment in China’s Post 1978 Development” , World Development, 23 (4)
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[8]	Dan Haan, W. J (1990), “The Optimal inflation Path in a Sidrauski-Type Model with Uncertaintity”, Journal of Monetary Economics, Vol. 28
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[10]	Eabaykai, E and H. Okuyan (2008), “Does Inflatiin depress Economic Growth? Evidence from Turkey”, International Research Journal of Finane and Economics
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[13]	Gbosh, A and P. Steven (1998), “Inflation, Disinflation and Growth” International Monetary Fund,Working Paper, WP/98/68
[14]	Hussain, S and S. Malik (2011), “Inflation and Economic Growth: Evidence from Pakistan”, International Journal of Economics and Finance, 3 (5): 32-54
[15]	Institute of Policy Analysis and Research (IPAR) (2014), Policy Brief. Vol 11, Issue 2
[16]	Jappeli, T and M. Pagano (1994), “Saving, Growth and Liquidity Constraints”, The Quaterly Journal of Economics, Vol. 109 (1): 83-109
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[19]	Mishkin, F.S (2000), “Inflation Targeting in Emerging Market Countries”, NBER Working Paper No: 7618 (Cambridge, Massachusetts, National Bureau of Economic Reearch)
[20]	Modigliani, F (1970), The life cycle hypothesis of savings and inter-country difference in the saving ration, In: Eltis, W.A, M.F Scott and J.N Wolfe (eds), Introduction to Trade and Growth essay in honor of Sir Roy Harrod, London, Clarendon Press
[21]	Muhammad, Hazoor, Shehzad and Naeem (2012), “The inter-relationship among Inflation, Savings and Economic growth in Pakistan”
[22]	National Bureau of Statistics (2012), Nigeria Economic Outlook, Federal Ministry of Finance, Abuja
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APA Style

Richardson Kojo Edeme, Innocent Ifelunini. (2015). Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data. Journal of Investment and Management, 4(5), 180-185. https://doi.org/10.11648/j.jim.20150405.16

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ACS Style

Richardson Kojo Edeme; Innocent Ifelunini. Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data. J. Invest. Manag. 2015, 4(5), 180-185. doi: 10.11648/j.jim.20150405.16

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AMA Style

Richardson Kojo Edeme, Innocent Ifelunini. Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data. J Invest Manag. 2015;4(5):180-185. doi: 10.11648/j.jim.20150405.16

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@article{10.11648/j.jim.20150405.16,
  author = {Richardson Kojo Edeme and Innocent Ifelunini},
  title = {Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data},
  journal = {Journal of Investment and Management},
  volume = {4},
  number = {5},
  pages = {180-185},
  doi = {10.11648/j.jim.20150405.16},
  url = {https://doi.org/10.11648/j.jim.20150405.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20150405.16},
  abstract = {The inter-relationship among savings, inflation and economic growth is an important conjuncture in the linkage evaluation of economic performance. Towards making them sustainable, the Nigeria government has initiated reforms, some of which in the last seven years. Despite these reforms, no study has been undertaken on the linkages among these variables with existing studies having confided themselves to looking only at the relationship between inflation and investment and the impact of inflation and economic growth. Using annual time series data from 1980-2013, this study examined the linkages among savings, inflation and economic growth in Nigeria using the 2-stage least squares (2SLS) method. The study found inflation and real interest to be negatively related with economic growth while exchange rate has positive effect on economic growth. Also economic growth, unemployment and real interest rate negatively affected inflation rate, while indirect taxes had positive impact on inflation. The result further shows that economic growth; exchange rate and foreign direct investment engender savings while depreciation rate endangers savings. The study also established threshold level of 8 percent of inflationary level was found to be consistent with Nigeria growth; beyond this point inflation will endanger growth},
 year = {2015}
}

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TY  - JOUR
T1  - Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data
AU  - Richardson Kojo Edeme
AU  - Innocent Ifelunini
Y1  - 2015/08/12
PY  - 2015
N1  - https://doi.org/10.11648/j.jim.20150405.16
DO  - 10.11648/j.jim.20150405.16
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 180
EP  - 185
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20150405.16
AB  - The inter-relationship among savings, inflation and economic growth is an important conjuncture in the linkage evaluation of economic performance. Towards making them sustainable, the Nigeria government has initiated reforms, some of which in the last seven years. Despite these reforms, no study has been undertaken on the linkages among these variables with existing studies having confided themselves to looking only at the relationship between inflation and investment and the impact of inflation and economic growth. Using annual time series data from 1980-2013, this study examined the linkages among savings, inflation and economic growth in Nigeria using the 2-stage least squares (2SLS) method. The study found inflation and real interest to be negatively related with economic growth while exchange rate has positive effect on economic growth. Also economic growth, unemployment and real interest rate negatively affected inflation rate, while indirect taxes had positive impact on inflation. The result further shows that economic growth; exchange rate and foreign direct investment engender savings while depreciation rate endangers savings. The study also established threshold level of 8 percent of inflationary level was found to be consistent with Nigeria growth; beyond this point inflation will endanger growth
VL  - 4
IS  - 5
ER  -

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Author Information

Richardson Kojo Edeme

Department of Economics, Faculty of Social Science, University of Nigeria, Nsukka, Enugu State-Nigeria
Innocent Ifelunini

Department of Economics, Faculty of Social Science, University of Nigeria, Nsukka, Enugu State-Nigeria

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Plain Text BibTeX RIS

APA Style

Richardson Kojo Edeme, Innocent Ifelunini. (2015). Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data. Journal of Investment and Management, 4(5), 180-185. https://doi.org/10.11648/j.jim.20150405.16

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ACS Style

Richardson Kojo Edeme; Innocent Ifelunini. Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data. J. Invest. Manag. 2015, 4(5), 180-185. doi: 10.11648/j.jim.20150405.16

Copy | Download

AMA Style

Richardson Kojo Edeme, Innocent Ifelunini. Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data. J Invest Manag. 2015;4(5):180-185. doi: 10.11648/j.jim.20150405.16

Copy | Download

@article{10.11648/j.jim.20150405.16,
  author = {Richardson Kojo Edeme and Innocent Ifelunini},
  title = {Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data},
  journal = {Journal of Investment and Management},
  volume = {4},
  number = {5},
  pages = {180-185},
  doi = {10.11648/j.jim.20150405.16},
  url = {https://doi.org/10.11648/j.jim.20150405.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20150405.16},
  abstract = {The inter-relationship among savings, inflation and economic growth is an important conjuncture in the linkage evaluation of economic performance. Towards making them sustainable, the Nigeria government has initiated reforms, some of which in the last seven years. Despite these reforms, no study has been undertaken on the linkages among these variables with existing studies having confided themselves to looking only at the relationship between inflation and investment and the impact of inflation and economic growth. Using annual time series data from 1980-2013, this study examined the linkages among savings, inflation and economic growth in Nigeria using the 2-stage least squares (2SLS) method. The study found inflation and real interest to be negatively related with economic growth while exchange rate has positive effect on economic growth. Also economic growth, unemployment and real interest rate negatively affected inflation rate, while indirect taxes had positive impact on inflation. The result further shows that economic growth; exchange rate and foreign direct investment engender savings while depreciation rate endangers savings. The study also established threshold level of 8 percent of inflationary level was found to be consistent with Nigeria growth; beyond this point inflation will endanger growth},
 year = {2015}
}

Copy | Download

TY  - JOUR
T1  - Savings, Inflation and Economic Growth Linkages: A Re-Examination with Nigeria Data
AU  - Richardson Kojo Edeme
AU  - Innocent Ifelunini
Y1  - 2015/08/12
PY  - 2015
N1  - https://doi.org/10.11648/j.jim.20150405.16
DO  - 10.11648/j.jim.20150405.16
T2  - Journal of Investment and Management
JF  - Journal of Investment and Management
JO  - Journal of Investment and Management
SP  - 180
EP  - 185
PB  - Science Publishing Group
SN  - 2328-7721
UR  - https://doi.org/10.11648/j.jim.20150405.16
AB  - The inter-relationship among savings, inflation and economic growth is an important conjuncture in the linkage evaluation of economic performance. Towards making them sustainable, the Nigeria government has initiated reforms, some of which in the last seven years. Despite these reforms, no study has been undertaken on the linkages among these variables with existing studies having confided themselves to looking only at the relationship between inflation and investment and the impact of inflation and economic growth. Using annual time series data from 1980-2013, this study examined the linkages among savings, inflation and economic growth in Nigeria using the 2-stage least squares (2SLS) method. The study found inflation and real interest to be negatively related with economic growth while exchange rate has positive effect on economic growth. Also economic growth, unemployment and real interest rate negatively affected inflation rate, while indirect taxes had positive impact on inflation. The result further shows that economic growth; exchange rate and foreign direct investment engender savings while depreciation rate endangers savings. The study also established threshold level of 8 percent of inflationary level was found to be consistent with Nigeria growth; beyond this point inflation will endanger growth
VL  - 4
IS  - 5
ER  -

Copy | Download