An Estimated New Keynesian Phillips Curve for Nigeria
An Estimated New Keynesian Phillips Curve for Nigeria

Summary/Abstract: This paper estimates a New Keynesian Phillips curve (NKPC) model for the Nigerian economy. This is to identify the structural parameters determining inflation dynamics in Nigeria.Previous studies that examined the dynamics of inflation in Nigeria have largely estimated the traditional Phillips curve. This study employs quarterly time series data on six macroeconomic variables from 1990:1 to 2012:4. The study adopts the Generalized Method of Moments (GMM) technique to analyse the data. The findings indicate that both backward-looking and forward-looking behaviour are significant determinants of inflation dynamics in Nigeria. The results, however, suggest that backward looking behaviour seems to be more quantitatively important in inflation dynamics. Moreover, the findings indicate that price of foreign input, money supply and the lending rate are the main drivers of inflation in Nigeria.

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