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The effect of the size of the informal sector on inflation rate

Ubah, Jeremiah Ifeanyi and Alege, P. O. and Ogundipe, Adeyemi A. (2023) The effect of the size of the informal sector on inflation rate. Innovations (73). pp. 324-332.

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Traditional monetary policy methods have been criticized for their efficacy in reducing inflationary pressures throughout the years. Inflation has recently become a hot topic, owing to the impact of government-led efforts to alleviate the influences of the COVID-19 epidemic as well as the supply train disruptions caused by the conflict in Russia and Ukraine. As a result, the purpose of this study is to find out how Nigeria's informal economy has changed over time and how this has affected inflation from 1980 to 2021. Estimation using OLS-based ARDL with EViews software. The estimated model was reviewed using some diagnostic tests (serial correlation test, normality test, and stability test). Only interest rate had a noteworthy positive influence on inflation in the long run in Nigeria. As opposed to that, exchange rate and the informal sector impacted Nigeria's inflation significantly. It is crucial that the apex bank adopts a more practical approach to root out inflation, such as bolstering the value of the Naira, minimizing supply bottlenecks, and striving for financial inclusion, in order to effectively deploy monetary policy tools in attaining a single figure inflation.

Item Type: Article
Uncontrolled Keywords: Keywords: Inflation, Informal Sector, Auto-Regressive Distributed-Lag (ARDL), Economic growth.
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: nwokealisi
Date Deposited: 11 Jan 2024 14:31
Last Modified: 25 Mar 2024 13:28

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