ABSTRACT

The study investigated the impact of inflation on investment and economic growth in Nigeria covering the period of1981 to 2018.The objectives ofthe study were to investigate the impact of inflation rate on economic growth in Nigeria and to examine the effect ofinvestment on economic growth in Nigeria. Annual time series data on inflation rate (INFL), Investment (INV), Interest rate (INT), Money Supply (MS) and Real GDP (RGDP) were collectedfrom National Bureau of Statistics (NBS) and The CBN. The study employed the unitroot test to check ifthe variables were stationary, OLS estimation results, thus revealed that, inflation rate has a negative and significant impact on economic growth in Nigeria, investment has a positive but insignificant impact on economic growth in Nigeria. From the findings, the study recommended that; the monetary authorities (Central Bank) through the activities of commercial banks should implement sound non-inflationary macroeconomic policies as well as inflation targeting mechanisms that will curb inflation rate in the economy since such will help for the achievement ofsustained economic growth. Also, the government should maintain an expansionary fiscal policy by increasing its investment and reducing taxes in order to in achieve a sustainable economic growth in the economy. There is also need to reduce interest rate in order to attract more foreign and local investment to the country which will increase the circulation ofmoney and also individual access to money.

Keywords: Inflation rate, Investment, Macroeconomic policy, Stabilization, Money supply, Economic growth.