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Stabilization Policies and Economic Growth: Error Correction Study from Nigeria

Briggs, Alasin Captain PhD

Abstract

Using a variety of economic variables, the study scrutinized the impact of stabilization policies on economic growth in Nigeria. The aggregate production function, which represents Solow growth theory, serves as the foundation for the hypothetical framework used in this study, as well as time series data as of 1990 – 2024. Real gross domestic product was modeled as the function of fiscal stabilization, financial stabilization and price stabilization. The study adopted the Error Correction Model. It was found that variety of significant factors influence Nigeria's economic growth, including fiscal stabilization, financial stabilization and price the study found that the independent variable explained 50.1% of the dependent variable, pursuant to the R-squared value of 0.501752and 50.1% of the dependent variable is determined by it, leading to the R-Bar- squared value of 0.501752. It found Durbin Watson value of 2.148402 to be 2, which implies that the model did not contain auto-correlation. The overall significance of the model can be assessed by the F-statistic of 4.330471 [P<.01]. From the findings, the study conclude that stabilization affect positively Nigeria economic growth. It recommends that the government of Nigeria ought to employ fiscal policy tools to ensure stability in the country's economy to archive economic growth. This is because; a balanced toolkit of fiscal and monetary policy could facilitate the creation and execution of robust economic policies.

Keywords

Stabilization PoliciesEconomic GrowthFiscal StabilizationFinancial StabilizationPrice StabilizationError Correction Study

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