Exchange Rate, Economic Growth and the Effects of Inflation-Induced Electricity Consumption on Unemployment in Nigeria
Year: 2025
Type: article
Abstract: The study investigated the relationship among exchange rate, economic growth and the effects of inflation induced electricity consumption on unemployment in Nigeria covering 1991 to 2024. ARDL model is the technique of estimation after ADF and KPSS unit root test confirmed mixed order variables. The short-run ARDL results reveal that past unemployment values exert a significant and persistent influence on current unemployment dynamics, indicating inertial tendencies. Notably, the interaction between inflation and electricity prices shows a consistently negative and statistically significant effect on unemployment, suggesting that inflationary pressures in the energy sector may induce labour market adjustments or temporary employment stimuli. In the long run, One percent increase in economic growth rate helps reduce unemployment rate by 1.078 at 1% level of significance. Based on these findings, short-run policies should target the persistent nature of unemployment through active labour market programs, including job creation, vocational training, and targeted subsidies on electricity for low-income households. Long-run strategies must emphasize inclusive growth and investment in affordable, inflation-resistant electricity infrastructure such as renewable and grid-based solutions. Stabilizing the exchange rate, although not statistically significant, may support broader macroeconomic stability and indirectly benefit employment outcomes.
Source: Journal of Arid Zone Economy
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4412083872