Abstract

This work deals on Regression analysis of the effects of Marrow money on inflation. The major objective is to determine the suitable model, explaining the relationship between inflation and narrow money. To achieve this objective, inflation and narrow . To achieve this objective, inflation and narrow money data were collected from the CBN website, from (2009 - 2011). Regression analysis method, T-test and ANOVA test were used in the analysis of the data. Based on the analysis, it was found out that at the start as inflation increases, narrow money increases. This continues until we get to the peak where inflation and narrow money are at the same point. Inflation begins to fall while narrow money narrow money are at the same point. Inflation begins to fall while narrow money In addition, the scatter plot indicated a polynomial relationship between inflation rates and narrow money. Based on this Quadratic and Cubic models where fitted, to the data and they were found out to be both significant at 5% level of significance. Using the minimum error percentage measure, the Cubic model was found to be more appropriate than the Quadratic model for predicting Inflation rates using Narrow money within the period (2009-2011).