Macroeconomic Policy Dynamics and Private Investment Behaviour in Nigeria
Journal Title: Journal of Empirical Economics - Year 2015, Vol 4, Issue 3
Abstract
This study was aimed at investigating private investment behaviour and macroeconomic policy dynamics in Nigeria using data covering the period between 1980 and 2012. The dependent variable is domestic private investment while the explanatory variables are: Real interest rate (INTR), Real exchange rate (REER), Inflation (INF) and Government size (GOVSIZE) proxied by ratio of government spending to GDP. The variables were tested for stationarity. Cointegration test was carried out to ascertain whether long run equilibrium relationship exist among the variables in the model. Five cointegrating equations were found. Since there are five cointegrating vectors, an economic interpretation of the long run private investment behaviour was obtained by normalizing the estimates of the unconstrained cointegrating vector on PINV. The identified cointegrating equations were used as error correction term in the ECM. The series forms the error correction variables. The over parameterize ECM was estimated, followed by a step wise reduction of jointly and statistically insignificant variables to obtain the preferred model. The parsimonious result shows that INTR, REER, GOVSIZE and INF are statistically significant in explaining the behaviour of private investment in Nigeria, particularly during the period under consideration. The study recommends policy measures to further reduce the rate of inflation to a single digit to stimulate private investment. Interest rate volatility is a treat to private investment. The apex monetary authority should be cautious in the management of interest rate.
Authors and Affiliations
Baghebo Michael, Eniekezimene A. Francis
Keywords
Related Articles
- EP ID EP27406
- DOI -
- Views 336
- Downloads 11
Impact of Economic Inflation on different levels of Education in West Bengal
The present study was conducted to examine the impact of economic inflation on the academic performance of the children. The respondents for this study were 150 head of the families. A sample survey was conducted by us...
Natural Resources and Economic Growth in Cote D’ivoire
This paper investigated the relationship between long run economic growth in Cote d‟Ivoire and natural resource abundance based on time series econometric techniques other the period of 1960-2012. To assess the nexus b...
The Effect of Institutional Quality on the Export of Developing Countries
In this paper, we studied the effect of institutional quality on the export of developing countries by using a panel data model for 34 countries over the period 1984 to 2009. The results showed that monetary policies (s...
Inflation Targeting and Economic Performance
An increasing number of countries have adopted inflation targeting since 1990. Currently there are 26 countries using inflation targeting in each continent of the world. This paper empirically deals with the inflation...
Does Electricity Consumption have Significant Impact towards the Sectoral Growth of Cambodia? Evidence from Wald Test Causality Relationship
It is recognized that energy-output relationship studies from an economic perspective have become popular among researchers recently. This study deals with the electricity consumption and outputs of some major economic...