ONYENDI Hilary Uchenna
Department of Banking and Finance.
Michael Okpara University of Agriculture Umudike, Abia State
hilluch2008@yahoo.com
OSUJI John I.
Department of Banking and Finance.
Michael Okpara University of Agriculture Umudike, Abia State
osujijohnibeawuchi@gmail.com
ONUEGBU Onyekachi
Department of Banking and Finance.
Michael Okpara University of Agriculture Umudike, Abia State
onyekaonu2018@gmail.com
OKORO Kelechi
Department of Banking and Finance.
Michael Okpara University of Agriculture Umudike, Abia State
okorokelechi4@gmail.com
ABSTRACT
The study examined effect of domestic price changes on personal income in Nigeria for the period spanning from 2010Q1 to 2022Q4. The major objective of the study is to ascertain if change in prices have positive or adverse effect on per capita income within the reviewed period. Stable demand and supply- determined prices stimulate stable disposable and real income by allocating values to the available goods and services and consequently stimulate robust per capita income. However it appears that the Nigeria has not attained this, as change in prices is the bane while real personal income and disposable income has deteriorated over the years and consequently the cost of living becomes very high. This calls for investigation. Thus, this study obtained secondary data from the Central Bank of Nigeria Statistical Bulletin of various issues, and tested same using unit root test, Autoregressive distributed lag (ARDL), General Autoregressive conditional heteroskedasticity (GARCH) and Granger causality test. The study found a long run relationship between per capita income and domestic prices changes; a GARCH effect on per capita income; and persistent domestic price dynamics. This implies that domestic price changes are determined by demand and supply, hence, susceptible to unexpected movements and shocks. The study therefore recommends that government should provide enabling environment for a stable, virile and predictable market determined prices; also provide price policies that will engender confidence in prices to the market participants so as to discourage speculation.
Keywords-: Domestic price dynamics, personal income, per capita income, price dynamics
JEL Classification: E31, E64, H24