Impact of Economic Policy Uncertainty on Inflation in Nigeria : Evidence from ARDL Model

Economic policy uncertainty has become a significant concern for both investors and policymakers around the world. Uncertainty in economic policies has profound effects on various macroeconomic variables including inflation. Understanding the impact of economic policy uncertainty on inflation is of great importance to a developing economy with unique economic challenges like Nigeria. Against this background, this paper examines the impact of economic policy uncertainty on inflation in Nigeria using the Autoregressive Distributed Lag (ARDL) Bonds Testing Approach. The study uses the newly developed economic policy uncertainty index for Nigeria covering the period from January 2010 to November 2022. The results show that economic policy uncertainty has a positive and significant impact on inflation in Nigeria, both in the short run and the long run. Our findings suggest that policymakers need to provide more clarity and certainty in their economic policy decisions to mitigate the adverse effects of uncertainty on inflation in Nigeria