ABSTRACTS

This study examined the nexus between inflation and manufacturing sector of the Nigerian economy in a bid to investigate if inflation rate affects manufacturing sector output in Nigeria. The paper made use of secondary data sourced from the statistical bulletin of the Central Bank of Nigeria (CBN) and covering a lime horizon of 38 years from 1981- 2018. The study utilized manufacturing output as dependent variable, while inflation rate, interest rate, money supply and exchange rate were used as independent variables. All four predictor variables were then regressed on the index of manufacturing sector output. The secondary data were then analyzed using the Error Correction Mechanism (ECM) estimation tool to examine the short run behaviour of the variables incorporated in the models adopted for this study. Particularly, the parsimonious ECM was estimation, among other objects, to ascertain the speed at which the model converges to long run equilibrium. Other pre-estimation test such as the Augmented Dickey-Fuller (ADF) unit root test, Johansen co-integration test was conducted. From the results of the analysis conducted ii can be concluded that neither inflation rate, interest rate, money supply or exchange rate exercise influence on the Nigerian manufacturing sector output during the duration of the study. The study thua recommends that; inflation must be managed very well in order to improve manufacturing sector productivity. Secondly government and the monetary authorities should encourage manufacturing sector production by making credit available to manufacturers at a competitive price this can be in the form of concessions and establishing a special credit window for this preferred sector of Nigerian economy. Finally, concerted effort should be made by policy makers lo increase the level of output in Nigeria by improving productivity/supply in order to reduce the prices of goods and services (inflation) so as to boost the growth of the manufacturing sector.

 Keywords:- Manufacturing Sector Output, Inflation Rate, Interest Rate, Money Supply, Exchange Rate