Investigating the Impact of Some Macroeconomic Indicators on Standard of Living in Nigeria: ARDL Bounds Testing Approach

Nwuju; Kingdom; Nwanneako; Sabinus Nnamdi; Lekara-Bayo; Ifeoma Better; Uket; Joy Ogum      : .

doi:10.56201/ijasmt.v10.no5.2024.pg60.73

📄 Download Paper

Investigating the Impact of Some Macroeconomic Indicators on Standard of Living in Nigeria: ARDL Bounds Testing Approach

Nwuju, Kingdom ; Nwanneako, Sabinus Nnamdi ; Lekara-Bayo, Ifeoma Better; Uket, Joy Ogum : .

Abstract

This study investigated the impact of macroeconomic indicators on the standard of living in Nigeria, using the Human Development Index (HDI) as the dependent variable, and Crude Oil Revue (COR), USD/NGN Exchange Rate (EXR), and Non-Oil Revenue (NOR) as independent variables. Time series data spanning from 1981 to 2022 as obtained from the Central Bank of Nigeria (CBN), was analysed to explore the long-run and short-run relationships among the variables. The methodology adopted was the ARDL bounds testing approach, which is suitable for variables with mixed orders of integration. The results of the ARDL bounds test confirmed a significant long-run relationship between HDI and the independent variables, with an F- statistic of 17.56677, surpassing critical values at all significance levels. In the short run, the lagged exchange rate was found to have a positive and significant effect on HDI, while the error correction term indicated a stable long-run relationship. The long-run results showed that exchange rates negatively affected HDI, with a coefficient of -0.055215, while non-oil revenue positively influenced HDI, with a coefficient of 0.117625. Crude Oil Revenue was found to have an insignificant long-run effect on HDI. The diagnostic tests revealed no issues with serial correlation or heteroscedasticity, confirming the robustness of the model. The findings suggest that exchange rate stability and increased non-oil revenue are critical for improving the standard of living in Nigeria. This study contributes to the literature on the economic determinants of human development, offering valuable insights for policymakers.

Keywords

Human Development IndexMacroeconomic IndicatorsExchange RateNon-Oil

References

Abonazel, M. R., Nwuju, K., Awwad, F. A., Lukman, A. F., Lekara-Bayo, I. B. & Atanu, E. Y. (2021). Long-run determinants of Nigerian inflation rate: ARDL bounds testing approach. WSEAS Transactions on Business and Economics, 18, 1370-1379. Adedeji, A. A., & Olanrewaju, O. M. (2021). The short-run dynamics of macroeconomic variables and human development in Nigeria. Journal of Economic Development, 15(4), 130-145. Akinwale, A. A., & Adegboye, O. A. (2020). Remittances and human development in Sub- Saharan Africa: Evidence from Nigeria. African Development Review, 32(3), 153-166. Osei-Assibey, E., & Aseidu, S. Y. (2021). The impact of remittances on human development in West Africa: A long-run analysis. Journal of African Economies, 30(2), 245-262. Oladipo, O. I., Oloruntoba, O. R., & Obadeyi, M. M. (2021). Econometric modelling of macroeconomic variables in Nigeria: Serial correlation and heteroscedasticity issues. Global Economics and Finance Review, 22(1), 73-90. Ogbuabor, J. E., & Eze, G. N. (2022). Testing model assumptions in econometrics: Serial correlation and heteroscedasticity in Nigeria. Journal of Economic Studies, 48(1), 88- Auty, R. M. (2020). Resource curse: A theoretical reappraisal. Resources Policy, 68, 101783. https://doi.org/10.1016/j.resourpol.2020.101783 Central Bank of Nigeria. (2023). Annual economic report. Retrieved from https://www.cbn.gov.ng Ejukwa, J. O., Tuaneh, G. L., & Onu, O. H. (2023). Autoregressive distributed lag error correction modeling of some macroeconomic indices in Nigeria. Faculty of Natural and Applied Sciences Journal of Scientific Innovations, 5(1), 141-154. Eze, E. E., & Ike, M. C. (2022). Exchange rate and human development in Nigeria: A short- run and long-run analysis. African Development Review, 34(2), 85-100. Olamide, A. T., Adedoyin, O. A., & Ibrahim, M. O. (2021). Exchange rates, inflation, and economic growth: The role of macroeconomic indicators in Nigeria. International Journal of Economics and Development Studies, 13(2), 204-218. Olaniyi, O. M., & Adebayo, S. I. (2022). Macroeconomic factors and the standard of living in Nigeria: A cointegration approach. African Journal of Economic Review, 10(3), 115- United Nations Development Programme (UNDP). (2022). Human Development Report 2022. Retrieved from https://hdr.undp.org World Bank. (2023). Nigeria economic update: Diversifying Nigeria’s economy. Retrieved from https://www.worldbank.org/en/country/nigeria/publication

Investigating the Impact of Some Macroeconomic Indicators on Standard of Living in Nigeria: ARDL Bounds Testing Approach

Abstract

Keywords

References

More Articles from INTERNATIONAL JOURNAL OF APPLIED SCIENCES AND MATHEMATICAL THEORY