摘要：It has been enunciated that it is possible to reduce the size of the sacrifice ratio in an economy without a corresponding increase in the rate of inflation. Besides, for the Nigerian economy, there are issues relating to the inflation-output relationship, among which is how inflation inertia impacts on output and unemployment . It is therefore apt to ascertain what Nigeria’s sacrifice ratio could be after many successful inflation reductions over the years. Adopting the Instrumental Variables Generalized Method of Moments (IV-GMM) technique and using data from1970-2015, the findings suggest that inflation inertia has a significant negative impact on the actual rate of inflation in Nigeria. It was also revealed that the percentage of a year’s real GDP that must be forgone to reduce inflation by 1 percent in Nigeria is 5.1 while 53.6 percent of output was sacrificed in 1982. Equivalently, a sacrifice of 26.6 percent of cyclical unemployment was made in the same year; while the highest percentage of GDP was sacrificed in 1990 and the lowest in 2007.
