Macroeconomics Aggregates And Economic Growth In Nigeria
Dibobie Gogogute Thomas
Department of Economics, Faculty of Social Sciences, Rivers State University, Nkpolu- Oroworukwo Port Harcourt, Rivers State, Nigeria
Elisha Anna
Department of Economics, Faculty of Social Sciences, Rivers State University, Nkpolu- Oroworukwo Port Harcourt, Rivers State, Nigeria
Davies Charles John
Department of Economics, Faculty of Social Sciences, University of Port Harcourt, Nigeria
Keywords: Aggregates, BOP, GDP, Economic growth, Exchange rate, Inflation rate
Abstract
The effectiveness of macroeconomic factors are essential for the growth and development of every emerging and developed nations.to this end, every economy must design frame work to ensure the working of the macroeconomic variables for uptimum economic growth and developnet. Given this premise, the paper examined the effect of selected macroeconomic aggregates on economic growth in Nigeria from 1985-2018. The objectives of the paper were to; exermine the effect of inflation rate, exchange rate and balance of payments (BOP) on economic growth in Nigeria. Time series on real gross domestic product (GDP), inflation rate, exchange rate and balance of payments (BOP) were sourced from central bank of Nigeria (CBN) statistical bulletin. The data was analyzed through Error Correction Mechanism (ECM) and granger causality technique. The stationarity test via the Augumented Dickey Fuller (ADF) unit root test preceded the ECM and Granger causality test. The unit root test showed that all the variables were stationary at order one. The Johansen co-integration result showed that there is a long run relationship amongst the variables. The parsimonious ECM result showed that, the adsjusted R2 is about 56percent. The coefficient of inflation rate appeared with negative sign. But the coefficient of exchange rate and BOPs appeared with positive sign. The Durbin Watson statistic value of 1.9 is very close to 2.0 bench mark, implies that there exists a lesser degree of serial autocorrelation in the model. In the meantime, the granger causality result showed that both exchange rate and BOP granger causes economic growth, while inflation rate does not impact on economic growth. Based on the findings, the following recommendation amongst others was made: Government together with the Central Bank of Nigeria should develop and pursue prudent monetary policies that would aim at reducing and stabilizing both the macro and macroeconomic indicators such as inflation targeting, interest rate, so as to boast the growth of the economy.