Mountain Top University Library

This study examined the effect of inflation on economic growth, it also analysed the effect
of exchange rate on economic growth and assessed the degree of responsiveness of economic
growth to inflation and exchange rate in Nigeria
The study made use of annual time series secondary data. Data on real GDP, inflation rate,
exchange rate, gross domestic saving, financial deepening, import, export, foreign direct
investment, employment and trade openness were sourced from World Development Indicators
(2017), Central Bank of Nigeria Statistical Bulletin (2018), Penn World Table, version 9.0 (2016).
The data collected were analysed using graphs, tables and econometric techniques, particularly,
Autoregressive Distributed Lag (ARDL) Model. The analysis performed are unit root test, using
both Augmented Dickey-Fuller (ADF) test and the Phillip and Perron (PP) test, the lag order of
the ARDL models using VAR lag order selection criteria and bound test
The result showed that the variables have a long run relationship with real GDP, some
have positive effect on real GDP (exchange rate, gross domestic saving, export and foreign direct
investment) and others have a negative effect on real GDP (inflation, financial deepening, import
employment and trade openness) and they are all insignificant.
The study concluded that inflation and exchange rate are not significant components for
any short and long term development plan in Nigeria.