Abstract:
The problem of unemployment in Nigeria has attracted the concern of stake holders, policy makers and researchers. Theory has it that there is a trade-off between unemployment and inflation. However, in Nigerian economy, inflation and unemployment occur concurrently. In few of this flaw in theory postulate, this study investigates the impact of inflation and unemployment on manufacturing output. The study utilized time series quarterly data from 1981Q1 to 2018Q4. Phillips Peron unit root test was used to determine the order of integration of the variables. The existence of long run association was tested using bound test approach. the study found that without the interaction of inflation and unemployment, inflation and unemployment only impact on manufacturing in the short run. However, the interaction of the variables shows that inflation impact on manufacturing through unemployment in the short run and long run. The study therefore recommends that for policy measures to boost manufacturing output to succeed, inflation and unemployment need to be checked.
