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Autoregressive Distributed Lag Modeling of the Effects of Some Macroeconomic Variables on Economic Growth in Nigeria

Author

Listed:
  • Adenomon Monday Osagie

    (Department of Statistics and NSUK-LISA stat lab, Nasarawa State University, Keffi, PMB 1022, Keffi, Nasarawa State, Nigeria; Foundation of Laboratory for Econometrics and Applied Statistics of Nigeria (aka FOUND-LEAS-IN-NIGERIA))

  • Ojo Rotimi Olalekan

    (Department of Statistics and NSUK-LISA stat lab, Nasarawa State University, Keffi, PMB 1022, Keffi, Nasarawa State, Nigeria)

Abstract

Research background: The relationship between inflation rate, unemployment rate, interest rate and real gross domestic product per capita in Nigeria. However, there seems to be a short-run or long-run relationship among the macroeconomic variables.Purpose: This study investigated the long and short run impacts of the inflation rate, unemployment rate and interest rate on real gross domestic product per capita (RGDPPC) (proxy for economic growth).Research methodology: This study applied a linear dynamic model Autoregressive Distributed Lag (ARDL) modeling technique to analyze the short-run dynamics and long-run relationship of economic growth in Nigeria over the sample period between 1984 and 2017 using annual secondary data extracted from the World Bank Development Indicators Report.Results: The empirical results showed that there was a long-run relationship between the inflation rate, unemployment rate and interest rate on real gross domestic product per capita (proxy for economic growth) in Nigeria. The results further revealed that only the unemployment rate had a significant positive impact on real gross domestic product per capita in the long-run and the inflation rate had a significant negative impact on real gross domestic product per capita in the short-run.Novelty: Therefore, the study concluded that the unemployment rate and inflation rate proved to have significant impacts on economic growth in the long-run and short-run respectively. The formulation of policies to reduce unemployment through the adoption of a labour concentrated technique of production, entrepreneurship development and policy to keep the inflation rate a single digit.

Suggested Citation

  • Adenomon Monday Osagie & Ojo Rotimi Olalekan, 2020. "Autoregressive Distributed Lag Modeling of the Effects of Some Macroeconomic Variables on Economic Growth in Nigeria," Folia Oeconomica Stetinensia, Sciendo, vol. 20(2), pages 1-19, December.
    • Handle: RePEc:vrs:foeste:v:20:y:2020:i:2:p:1-19:n:7
    DOI: 10.2478/foli-2020-0032
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    Cited by:

    1. Małgorzata Tarczynska-Luniewska & Iwona Bak & Uma Shankar Singh & Guru Ashish Singh, 2022. "Economic Crisis Impact Assessment and Risk Exposure Evaluation of Selected Energy Sector Companies from Bombay Stock Exchange," Energies, MDPI, vol. 15(22), pages 1-25, November.
    2. Ghilous Azeddine & Ziat Adel, 2023. "Balance of Payments as a Monetary Phenomenon: An ARDL Bounds Test Method for Algeria," Folia Oeconomica Stetinensia, Sciendo, vol. 23(1), pages 64-86, June.

    More about this item

    Keywords

    ARDL; inflation; interest; long-run; RGDPPC; short-run; unemployment;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

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