Abstract

This paper investigates the relative importance of public debts and money growth on inflation in Nigeria from 1980 to 2015. Annual secondary data collected from World Development Indicators were used for the analysis. After examining the behaviour of the time series, Unrestricted Vector Autoregressive (VAR) technique of estimation is employed with a view to determining whether inflation is a monetary or fiscal phenomenon in Nigeria. The results show that, both in the short and long run, public debts accounts for a sizeable percentage in the variation of inflation rather than growth in monetary supply, making inflation a fiscal phenomenon in Nigeria. We therefore recommend that the attainment of fiscal solvency would be more effective in achieving price stability in Nigeria.

This work is licensed under a Creative Commons Attribution 4.0 License.