[01] Femi-Oladunni Opeyemi Afolabi, Department of Agricultural Extension and Management, Federal College of Agriculture Akure, Ondo State, Nigeria.

This study examined the responsiveness of economic growth to inflation rate in Nigeria from 1970-2012. The study used secondary data obtained from Central Bank of Nigeria (CBN) statistical bulletin 2012, the data were analyzed using Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP), findings shows that INF (Inflation rate), EXR (Exchange rate), INT (Interest rate) variables were stationary while GRM (Growth rate of money supply), GRGDP (Gross rate of Gross Domestic Product), FDGDP (Ratio of Fiscal deficit to Gross Domestic Product) variables were not stationary. The Johansen-Juselius co-integration technique was employed in this study in accessing the co-integrating properties of the variables. The impacts of each of the endogenous variables are investigated using the Vector Error Correction Model (VECM). The study revealed that INF (-0.1672), GRM (-0.3363) and EXR (-0.0177) have negative coefficient respectively, findings also revealed that; the coefficient of other variables FDGDP (0.0185), GRGDP (0.07657) and INT (0.068681) shows a positive relationship (respectively). The study concluded that on the long-run, interest rate is the fastest variable through which inflation and output growth react in Nigeria. It was recommended that, the monetary authority needs to target the interest rate in other to reduce inflation growth and positively impact output growth in the economy.

Economic Growth, Inflation Rate, Developing Economy, Nigeria, Augmented Dickey Fuller, Phillips-Perron, Johansen-Juselius Co-integration

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