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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Inflationary dynamics in Nigeria
Authors:Fullerton Jr, Thomas M.ISNI
Ikhide, Sylvanus I.ISNI
Periodical:The Nigerian Journal of Economic and Social Studies
Geographic term:Nigeria
Subjects:monetary policy
Abstract:One of the most difficult policy issues confronting monetary authorities in many developing economies is high and chronic inflation, and there exists a widespread need for anti-inflationary programmes. The first step in analysing the potential success of any short-run price stabilization effort is to understand a country's inflationary dynamics. This article develops a monetary inflation model for the Nigerian economy, using simulation experiments to examine short-run price movements over the period 1970/71 to 1993/94 under three potential policy environments: baseline (the annual rate of growth in money supply and the rate of currency devaluation are held constant at 40 percent over the entire period), gradual (both rates are gradually and incrementally lowered), and conservative (the rate of expansion in overall liquidity is immediately lowered to 20 percent and held constant over the entire period, the annual rate of devaluation is held constant at 20 percent). Initial results indicate that it may be important to determine which money definition is appropriate for analysing the macroeconomy of Nigeria. No matter which liquidity series is used, however, the analysis provides relatively clear evidence that Nigerian prices are fairly responsive to monetary policy steps taken by the Central Bank. Bibliogr., note, sum.