A Time Series Regression Modelling Approach on Economic Growth Control Variables

Olugbenga G. Ojo, Olusegun S. Are, Lawrence O. Aako, Volume 3 Issue 2, December 2022 Pages 85-91, Published: 2022-12-09

Abstract

Economic growth and development have become so necessary among African countries like Nigeria for proper improvement in the quality of life. Thus, this research estimates the relationship effect of Gross Domestic Product on economic growth through the dependent (gross domestic product) and independent (food security, exchange rate, import) variables, exploring an annual time series data covering the period of 2005 to 2019 using Auto Regressive Distributed Lag (ARDL) Bounds Test Procedural Algorithm approach. The empirical result, therefore, reveals the special presence of a long-run relationship among gross domestic product, food security, and exchange rate variables. While in short term, the importance of food security, exchange rate, and import on economic growth is confirmed, as the coefficient of the ECT (− 0.22665) is negatively significant. This clearly shows that in the next year, the error in Gross Domestic Product is corrected by 22.67%, thus and so there would be a restored effect of the long-run equilibrium within the of 22.67%. Hence, the study proved the basic importance of the exchange rate and as well clarified it as one of the best tools to manage the country's economic system. For upturned economic sustainability, policymakers should always maintain a high exchange rate in the process