A conceptual paper on the effect of consumer price index on economic growth using autoregressive distributed lag model approach

The effect of the consumer price index on Nigeria's economic growth was examined in this study. All variables in the model were allowed to be endogenous variables by using the Autoregressive distributed lag Model (ARDL). The study used Secondary data from 1983 to 2023. The study uses the autoregressive distributed lag Model and an Error correction mechanism on some selected relevant variables, which include Gross domestic product (GDP), Inflation rate, Interest rate, Exchange rate, degree of economic openness, money supply, and government consumption expenditures for the years 1983-2023 to investigate the effect of CPI on the growth prospects of the Nigerian economy. According to the results of other researchers who conducted comparable studies, the money supply and interest rate have a major positive influence on economic growth, whereas the real exchange rate and inflation have a large negative impact. The model's other variables show little impact on Nigeria's economic growth. The causation result demonstrates the one-way links that exist between the gross domestic product, government consumption expenditures, interest rates, and exchange rates. However, there is no correlation between the degree of openness and inflation and the GDP. As a result, the study concludes that to prevent inflation's negative effects and ensure a practicable rate that would support economic growth, this research proposes using autoregressive distributed Lag model approach, which should be able to make more concerted effort in looking at the high inflation in the economy.