Prices of Oil, Trend of Inflation, and Macroeconomic Performance in Nigeria Revisted
Abstract
The study tested the validity of forecasting inflation in the short run through a Phillips curve inflation model or whether it follows a non-linear and asymmetric flow through its effects on changes in prices of oil, inflation and consequently on macroeconomic performance using Nigerian data from 1986 to 2020. Using the Autoregressive Distributive Lag Model (ARDL) approach, our results showed that there is cointegration among the variables and the existence of a relationship in the long run. So also, decomposition significantly affects the rate of interest and prices of oil in the long run. We therefore conclude with available data that prices of oil affect inflation and macroeconomic performance and thus follow an asymmetric non-linear flow. It therefore remains a better alternative in inflation forecasting unlike the Phillips forecasting model.
Keywords: Trends in Inflation, Prices of Oil, Macroeconomic Performance, DARDL, Phillips Model.
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