The Impact of Selected Macroeconomic Variables on Economic Growth in Nigeria

Abstract

 This study investigates the impact of selected macroeconomic variables on economic growth in Nigeria from 1981 to 2023, utilising key economic variables, including inflation rate, interest rates, trade openness, unemployment and exchange rates. The analysis employs data sourced from the World Development Indicators, leveraging the Autoregressive Distributed Lag (ARDL) approach to capture both short-run and long-run dynamics. The findings reveal a significant negative relationship between inflation and economic growth, with a particularly strong impact on interest rates and unemployment. In contrast, trade openness and exchange rates exhibit no significant influence on growth during the study period. Based on these findings, the study recommends implementing robust monetary policies to control inflation, enhancing financial inclusion to lower interest rates and fostering policies aimed at reducing unemployment to stimulate economic growth. Additionally, it suggests that future research should explore the interactions between these variables across different sectors to better inform policymakers.