Main Article Content
Price stability and full employment are not complimentary macroeconomic objectives rather they are conflicting macroeconomic goals. In order words inflation and unemployment are also conflicting policy objectives. It therefore implies that one must be sacrificed to attain the other. The main objective of this study is to analyse the unemployment and inflation trade-off: the Nigerian experience regarding the Philip curve. The study used time series econometric analysis. The Augmented Dickey-Fuller (ADF) unit root test showed that the variables were of I(0) and I(1), hence Autoregressive Distributed Lag Model (ARDL) was used for the estimation. The study found that the Philip Curve of an inverse relationship between the two variables (Inflation rate and Unemployment rate) is true for Nigeria economy. The analysis showed that inflation rates fall from 34 percent to 12.2 percent and consequentially to 12.0 percent for the decade analysis. Conversely unemployment rate increased from 3.3 percent to 13.7 percent and subsequently to 15.6 percent. This study therefore confirms Philip theory in Nigeria. Theoretical evidence showed that monetary policy used in solving unemployment worked best when it allowed the real economy to respond appropriately to economic fundamentals. This was shown by low speed of adjustment of 48.9 as shown by the co-integration result. It was recommended that credit control and demonetisation of currency with higher denomination can be a viable monetary policy while a surplus budget and reduction in government expenditure can be a viable fiscal policy when inflation poses a serious challenge.