Impact of Military Expenditure on Inflation in Nigeria1980-2012
John O. Aiyedogbon, Bright Onoriode Ohwofasa

The study entitled “Impact of Military Expenditure on Inflation in Nigeria; 1980- 2012” investigates the relationship between inflation and some macroeconomic variables particularly military expenditure. Military expenditure was disaggregated into recurrent and capital components while other variables are interest rate, money supply and exchange rate. The methods of study were basically co-integration, ARCH and granger causality tests. The empirical results show that long run relationship exists between inflation and the macroeconomic variables. Whilst, impact of capital military expenditure and exchange rate on inflation rate is found to be negative, recurrent military expenditure, interest rate and money supply exhibit positive impact on inflation in Nigeria. And, the study could not establish causality between inflation and military expenditure during the period under review. It therefore recommended that any increase in military expenditure should be on the capital component since its impact on inflation is negative.

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