MODELING SOME SELECTED MICRO-ECONOMIC VARIABLES ON ECONOMIC GROWTH OF NIGERIA VIA REGRESSION MODEL

Abstract

Measuring gross domestic product has been a challenge to econometricians over the years as different macroeconomic variables have been employed by several investigators with varied results but the subject still remains a topical issue. This study examined empirical dynamic relationship between some selected macroeconomic variables on the growth of Nigeria economy.

Secondary data was obtained from the World Bank online database which covered a period of thirty-six years (1985– 2021). The variables employed were the Gross Domestic Product (GDP) in billions of Naira, Population Growth Rate (PGR) in (%), Exchange Rate (ER) of Dollar to Naira, Interest Rate (INR) in (%) and Inflation Rate (IR) in (%) and Statistical Package for Social Sciences (SPSS) IBM Version 23.0 was employed in analyzing the data. The fitted regression equation for this model was: GDP = -1.629E+12 + 6.843E+11*population growth + 1088791164*exchange rate + 641376491*inflation rate + 1076243147*interest rate. Therefore, the study found that population growth and exchange are statistically significant in inferring gross domestic product. It is recommended that the apex banking body in Nigeria should put in place a stringent foreign exchange control mechanism to ensure that value of Naira against other currency is appropriately determined and steps should be taken to reduce inflation in the country by implementing different tools to control the circulation of money in the economy.