INFLATION AND ECONOMIC GROWTH IN SOME SELECTED WEST AFRICAN COUNTRIES (1970-2014).

The true impact of inflation on economic growth has recently created both theory and empirical controversies in most economies. In a bid to attempt an empirical resolution, the research investigated the impact of inflation on economic growth in some selected West African countries of Nigeria, Ghana and Cote d’Ivoire between 1970 and 2014. The autoregressive distributed lag (ARDL) model, Least Squares Dummy Variable (LSDV) estimation technique, Pairwise granger causality test and impulse response function were used to analyze annual time series data on GDP growth rate, consumer price index, money supply, volume of investment, exchange rate and foreign direct investment. While the ARDL captured country specific effects of inflation on economic growth, the LSDV captured comparative effects of inflation on economic growth. The result from ARDL shows fluctuations in the consumer price index as the key negative motivator of the GDP growth rate in Nigeria, Ghana and Cote d’Ivoire. Result from the LSDV model shows the consumer price index to be negatively related to GDP growth rate in Nigeria but positively related to GDP growth rate in Ghana and Cote d’ Ivoire. On comparative terms, the result shows Nigeria to be worse off relative to Ghana and Cote d’ Ivoire. Other macroeconomic variables like volume of investment, money supply and foreign direct investment were equally important in explaining inflation in the selected West African countries. Policy makers in Nigeria, Ghana and Cote d’Ivoire were urged to focus on maintaining inflation at a low single digit through increased agricultural produce and the use of contractionary monetary and fiscal policy mix consistent with low inflation to curb any negative effects of inflation on economic growth. Nigeria in particular was urged to borrow relevant inflation policies from Ghana especially the open declaration for inflation targeting