The Relationship between Inflation and Unemployment in Nigeria

The main objective of this study is to examine the relationship between inflation and unemployment in Nigeria for the period 1977 – 2013 through the use of the Phillips Curve. To analyze the data on inflation and unemployment, this study used Vector Error Correction Model and Granger Causality technique in order to test the validity of the Phillips Curve relationship in Nigeria. The Granger Causality Test shows that inflation Granger causes the unemployment. Inflation and unemployment are destructive rather than helpful to the economic development and growth in Nigeria. According to the empirical findings of this study, as in the Philips Curve, there is a negative relationship between inflation and unemployment rates in Nigeria. Keywords: Phillips Curve, Cointegration, Inflation, Unemployment.