Statistical Investigation of the Phillips Curve Relationship Between Inflation and Unemployment in the Nigerian Economy

The Phillips curve relationship between inflation and unemployment has been theoretically and empirically contested in emerging economies, and its statistical characterisation in the Nigerian context using recent data and robust econometric methods contributes to this ongoing debate with specific national relevance. This study statistically investigates the Phillips curve relationship in Nigeria using quarterly national unemployment rates and headline CPI inflation from 2010 to 2023. Unit root tests employed ADF, PP, and KPSS procedures. Engle-Granger cointegration and Johansen trace tests examined long-run relationships. Short-run dynamics were captured by an error correction model. Expectations-augmented specification incorporated lagged inflation as an inflation expectations proxy. Rolling window estimation tested parameter stability. ADF tests confirmed non-stationarity in both series at levels, with stationarity after first differencing. Johansen trace test found no cointegration between levels (trace statistic = 7.2, critical value = 15.4 at 5 percent), implying no stable long-run Phillips relationship. ECM estimation of the short-run relationship yielded an insignificant unemployment-inflation coefficient (beta = -0.08, p = 0.41), consistent with a flat or vertical short-run Phillips curve. The expectations-augmented term was statistically significant (beta = 0.64, p < 0.001), indicating persistent inflationary expectations. Rolling window estimates showed no period of stable significant negative Phillips coefficient. The study provides rigorous econometric evidence that the conventional Phillips curve does not hold in Nigeria and recommends alternative inflation management frameworks emphasising expectations anchoring. Keywords: Phillips curve, inflation, unemployment, cointegration, Nigerian economy