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ISSN : 2456-3676

Title:
RELATIONSHIP BETWEEN ECONOMIC GROWTH, FISCAL POLICY, REAL INTEREST RATE AND REAL EXCHANGE RATE: AN ECONOMETRIC MODELLING STRUCTURE IN NIGERIA

Authors:
MomoduAyodeleA., Monogbe Tunde G & Anyamaobi, Chukwuemeka MomoduAyodele A, Monogbe Tunde G, Nigeria

Abstract:
This study seek to analyse the interplay between economic growth, fiscal policy, exchange rate and interest rate in Nigeria using a dis aggregate estimation to capture the various direction of causality and consociation. The paper employ time series data where three model were estimated. The report from the first model shows that the behaviour of interest rate and exchange rate does not seems to stimulate private consumption. This therefore gives a connotation that the aggregate demand by Nigerians and foreigners for domestic goods exceeds aggregate supply in Nigerian goods which has actually fuel the ongoing exchange rate saga over the years. The second model developed an export demand equation with the intension of examining the interplay between import, export and non-oil export. From the first estimation, the report establishes that the negative behaviour between the ratios of non-oil export to aggregate import gives a unidirectional impression such that the quantum of import to export in Nigeria is imbalance thereby leading to trade deficit. The last model tend to examine the extent to which economic growth, fiscal policy proxy with aggregate government expenditure and interest rate react to real exchange rate in Nigeria. The report shows that The lagged linear value of the real Interest Rate does not statistically influence the linear value of the real Exchange Rate. This implies that the de-trended value of the interest rate won't statistically influence the exchange rate level in the Nigerian context.

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