Econometric Analysis of the impact of inflation, unemployment, and economic growth on poverty reduction: A novel application of Asymmetric technique

Ekpeyong, Paul (2023): Econometric Analysis of the impact of inflation, unemployment, and economic growth on poverty reduction: A novel application of Asymmetric technique. Forthcoming in: Asian journal of economics and empirical research , Vol. 10, No. 1

Abstract

This study conducts an econometric analysis using time series data from 1980 to 2021 to examine the relationship between explanatory factors and poverty in Nigeria. The study employs both short-run and long-run estimates through the Non-Linear Autoregressive Distributive Lag (NARDL) approach. By utilizing a comprehensive dataset and applying various econometric methodologies, the study aims to provide reliable results. The findings suggest that in the short run, inflation, unemployment (positive and negative shocks), and population significantly influence poverty rates in Nigeria. However, these effects are not statistically significant at conventional levels. In the long run, population growth, unemployment, and inflation (negative shock) do not have a substantial impact on poverty. On the other hand, economic growth, as measured by GDP growth, demonstrates a positive relationship with poverty reduction. The analysis indicates that sustained economic growth leads to lower poverty rates over the long term. Based on these results, the study emphasizes the importance of promoting sustainable economic growth as a key strategy for poverty reduction in Nigeria. Policy measures that focus on job creation, inflation control, and investment in human capital development are crucial for poverty alleviation. Additionally, addressing the specific needs of vulnerable populations and regions with high poverty rates should be prioritized. This study contributes to the existing literature by providing empirical evidence on the relationship between explanatory factors and poverty in Nigeria. The findings underscore the significance of a comprehensive approach that combines inclusive economic growth with targeted policies to address the structural factors underlying poverty.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation, Unemployment, poverty, NARDL, Positive shock, Negative shock
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E66 - General Outlook and Conditions; H - Public Economics > H1 - Structure and Scope of Government

References

Aigbokhan, B. E. (2000). Poverty, growth and inequality in Nigeria: A case study.

Aiyedogbon, J. O., and Ohwofasa, B. O. (2012). Poverty and youth unemployment in Nigeria, 1987-2011. International Journal of Business and Social Science, 3(20), 269-279.

Aminu, U., and Anono, A.Z. (2012). Effect of Inflation on the Growth and Development of the Nigerian Economy (An Empirical Analysis). International Journal of Business and Social Science, 3(10), [Special Issue- May 2012].

Chen, L., and Li, M. (2021). Poverty and Economic Growth in Africa: A Cross-Sectional Analysis. Journal of Development Economics, 127, 102399.

Gordon, D. (2013). The Concept and Measurement of Poverty. In Pantazis, C., Gordon, D., & Levitas, R. (Eds.), Poverty and social exclusion in Britain. Policy Press.

Granville, B., and Mallick, S. (2006). Integrating Poverty Reduction in IMF-World Bank Models, Working Papers id:502, eSocialSciences.

Gujarati, D. N. (2009). Basic Econometrics. Tata McGraw-Hill Education.

Ibrahim, H., and Umar, H.S. (2008). Determinants of Poverty among Farming Households in Nasarawa State, Nigeria. 4(1), 11-21. J. Econ. Sustain. Dev. 2015, 6, 116–123.

Johnson, A., and Brown, R. (2023). Inflation and Economic Growth in Emerging Economies: A Panel Regression Analysis. Journal of Economic Studies, 40(2), 210-228.

Kale, Y. (2012). Nigeria: The nation’s paradox – poverty amidst plenty.

Khan, M. S., and Senhadji, A. S. (2001). Threshold Effects in the Relationship between Inflation and Growth. IMF Staff Papers, 48(1), 1-21.

Misini, S.; Badivuku-Pantina, M. (2017). The effect of economic growth under nominal GDP in relation to poverty. Rom. Econ. J. 20, 104–116.

Nurdiana, N.; Hasan, M.; Arisah, N.; Riesso, A.S.; Hasanah, D.F. (2020). An analysis of the effect of economic growth, inflation, and open unemployment on poverty in South Sulawesi Province. J. Res. Bus. Manag. 8, 14–17.

Ogbeide, E.N.O.; Agu, D.O. (2015). Poverty and income inequality in Nigeria: Any causality? Asian Econ. Financ. Rev. 5, 439–452.

Okoroafor, M., and Nwaeze, C. (2013). Poverty and economic growth in Nigeria 1990-2011. The Macrotheme Review, 2(6), 5I-63.

Osterling, K. (2007). Social Capital and Neighbourhood Poverty: Toward an Ecologically-Grounded Model of Neighbourhood Effects, Journal of Social Behaviour in the Social Environment, 16(1-2).

Peter, S.; Adewale, E.A.; Siyan, P.; Adegoriola, A.E. (2017). An assessment of nexus between infrastructural development and Nigerian economic growth. Afr. J. Bus. Manag. 11, 470–477.

Rafindadi, A.S. (2012). Macroeconomic Policy, Output and Unemployment Dynamics in Nigeria: Is There Evidence of Jobless Growth? Paper presented at the 53th Annual conference of the Nigerian economic society on Youth Employment and Poverty Reduction in Nigeria.

Rodriguez, J., and Garcia, M. (2023). Unemployment, Inflation, Poverty, and Economic Growth: A Structural Equation Modeling Approach. Journal of Applied Economics, 18(3), 234-252.

Smith, J., et al. (2022). Unemployment and Economic Growth in Developed Countries: A Vector Autoregression Analysis. Journal of Economic Dynamics and Control, 48, 103041.

Talukdar, S. R. (2012). The Effect of Inflation on Poverty in Developing Countries: A Panel Data Analysis (Doctoral Dissertation, Texas Tech University).

UNCTAD (2006). United Nations Conference on Trade and Development. World Investment Report.

World Bank. (2017). World Development Indicators.

Yelwa, M., Okoroafor, O. K. D., & Awe, E. O. (2015). Analysis of the Relationship between Inflation, Unemployment and Economic Growth in Nigeria. Applied Economics and Finance, 2(3), 102-109.