IMPACT OF SELECTED MACROECONOMIC AGGREGATES ON ECONOMIC GROWTH IN NIGERIA: A THREE STAGE METHODICAL PROCESS
EZENEKWE, Uju Regina and OBAYORI, Joseph Bidemi
ABSTRACT This paper empirically examined the impact of selected macroeconomic aggregates on economic growth in Nigeria from 1985-2014 via a three stage methodical processes. This is because, the basic macroeconomic indicators suchgeneral price level, exchange rate and BOP which serve as the drivers of the economy have not performed creditably well in order to spur growth. Thus, the objectives of the study were to;determinethe impact of inflation rate, e x c h a n g e r a t e and balance of payments on Nigeria’seconomic growth. To achieve the stated objectives, secondary data on GDP, inflation rate, exchange rate and BOP were collected through CBN statistical bulletin and estimated via the, co-integration and granger causality techniques. The result of the ADF unit root test shows that all the variables were found to be stationary. Also, the co-integration carried out using the Johansen co-integration technique shows that there is a long run relationship amongst the variables. Thus, the alternative hypothesis of long run relationship between macroeconomic aggregates and gross domestic product was accepted. The Chow Test result shows that although the two period f-value were statistically significant in explaining the impact of selected macroeconomic aggregates on economic growth in Nigeria, the f-stat of 46.7 during the period of sustained democracy is greater than the f-value of 36.5 before the period of sustained democracy. Thus, the study concludes that macroeconomic aggregates vis-à-vis inflation rate, exchange rate and BOP impact more on economic growth in Nigeria after the period of sustained democracy than before the period of sustained democracy.Based on the findings, the paper recommended that there should be continuity and consistency of macroeconomic policy measures in the Nigerian economy to redress the problem of exchange rate variation in order to boost economic growth. Also, it is recommended that the government together with the Central Bank of Nigeria should develop and pursue prudent monetary policies that would aim at reducing and stabilizing macroeconomic indicators such as inflation, so as to boast the growth of the economy.