Vol. 2 No. 3 (2024)

Open Access

Article

Article ID: 1806

Does economic growth, external debt, and institutional quality promote poverty and income inequality in Nigeria?

by Magaji Ibrahim Yakubu, Samson Adeniyi Aladejare

Forum for Economic and Financial Studies, Vol.2, No.3, 2024; 55 Views

The United Nations sustainable development goal 10 (SDG10) aims to reduce inequality and by extension poverty within and between countries. However, issues of economic growth, external borrowing, and institutional quality could clog efforts at realising SDG10, particularly in a developing country. Thus, this study assessed the effect of economic growth, foreign debt, and institutional quality on poverty and income inequality in Nigeria between 1990 and 2022. The research applied the autoregressive distributed lag (ARDL) technique in its empirical analysis. Findings from the study indicated that economic prosperity does not have significant long-run impact on poverty and inequality. However, the short-run relationship showed that economic growth increases inequality in Nigeria. Foreign borrowing was revealed to further aggravate poverty and inequality in the long-run. Also, while government effectiveness demonstrated an enhancing effect on poverty in the short and long-run periods, its long-run impact on inequality is significantly decelerating. Thus, based on the aforesaid conclusions the study recommends the strengthening of small and medium enterprises through access to finance at lower interest rates and equitable distribution of national wealth through the payment of a living wage, provision of social and economic infrastructure, etc. Also, the agricultural sector should be made more attractive to the youths through encouraging export promotion policies. Leveraging financial technology, and encouraging start-up firms can further reduce the poverty and the inequality level in the country.

Open Access

Review

Article ID: 1626

Why the European Central Bank lacked efficacy to fight against the recent surge in inflation

by Séverine Menguy

Forum for Economic and Financial Studies, Vol.2, No.3, 2024; 53 Views

The paper focuses on the determinants of the surge in inflation between 2021 and 2023 and on the efficacy of monetary policy in fighting against these inflationary tensions. The main role of the European Central Bank is to ensure that inflation expectations remain anchored to a clear target. An active monetary policy can also stabilize future expected inflationary tensions or demand shocks. However, a simple theoretical model can explain the incapacity of European monetary policy to fight against the supply-side factors of inflation in the post-COVID period: inflationary tensions inherited from previous periods, imported from foreign countries (energy and food), or due to higher current or anticipated profit margins. In these cases, a huge increase in the nominal interest rate and a very contractionary monetary policy only risk creating a strong recession, without avoiding inflationary tensions.