INFLATION AND ECONOMIC GROWTH IN NIGERIA: THE ROLE OF GOOD GOVERNANCE

Good governance plays a key role in directing a society’s economic road map, paving the way for sustained economic development, social stability and national prosperity. This paper empirically examined inflation and economic growth in Nigeria: the role of good governance between 1981 and 2024 using the institutionalist variant of the political economy approach. Both descriptive statistics and the Ordinary Least Square (OLS) method of multiple regression analysis were employed to analyze the data. The result of the OLS shows that Inflation (INFL) has a negative and a significant relationship with Per Capita Real Gross Domestic Product (PCRGDP), a proxy for economic growth in Nigeria. This means that Inflation (INFL) reduces Economic Growth in Nigeria within the period of study. Exchange Rate (EXCR) has a positive and an insignificant relationship with Per Capita Real Gross Domestic Product (PCRGDP), a proxy for economic growth in Nigeria. This means that Exchange Rate (EXCR) increases economic growth in Nigeria within the period of study. Interest Rate (INTR) has a positive and a significant relationship with Per Capita Real Gross Domestic Product (PCRGDP) a proxy for economic growth in Nigeria. This means that Interest Rate (INTR) increases Economic Growth in Nigeria within the period of study. Money Supply (MS) has a negative and an insignificant relationship with Per Capita Real Gross Domestic Product (PCRGDP) a proxy for economic growth in Nigeria. This means that Money Supply (MS) do not have a significant effect on Economic Growth in Nigeria within the period of study. The paper therefore concludes that Inflation (INFL) reduced economic growth while interest rate increased economic growth in Nigeria within the period under review. The paper therefore recommended amongst others that the Central Bank of Nigeria (CBN) should pursue a credible, flexible inflation-targeting regime. Also, the federal government of Nigeria should promote non-oil exports (e.g., agriculture, manufacturing, services etc.) to make the economy more responsive to exchange rate movements. The paper further recommended that the federal government of Nigeria should promote and implement transparent mechanisms and citizens participation in governance. This will help to tame systemic corruption and achieve minimal inflation and sustained economic growth in Nigeria.