Evaluating the impact of inflation on investment decisions in Nigeria

This study examines the relationship between inflation and investment decisions in Nigeria using data from 2010-2024. Employing a comprehensive econometric approach including fixed effects regression, Vector Autoregression (VAR), and Granger causality tests, we analyze how inflationary pressures influence both private and public investment decisions. Our findings reveal a significant negative relationship between inflation and investment levels, with a 1% increase in inflation leading to a 0.65% decrease in private investment. The study contributes to the understanding of macroeconomic dynamics in emerging African economies and provides policy recommendations for maintaining price stability to foster investment growth.