Macroeconomic Forces: An Experiential Exploration of its Sway on Governance and Sustainable Economic Development in Nigeria

Abstract

Macroeconomic forces are the variables that promote economic growth and development.Macroeconomic fundamentals are the engine room of the sectorial development in an economy. The study, therefore, examined the impact of macroeconomic fundamentals  on government and sustainable economic development in Nigeria from 1987 to 2020. Time series were used for the study, which was sourced from the Central Bank of Nigeria statistical bulletin and National Bureau of statistics. Data sourced were analysed using; Trend analysis, descriptive statistics, correlation matrix, unit root test, Cointegration test, long–run coefficient, Auto-regressive distributive lag error correction model, post estimation, and stability test. The study analysis was carried out with selected macroeconomic variables; inflation rate, interest rate, broad money supply, Real Gross Domestic Product, and
unemployment rate. Their result of the long-run coefficient of the model revealed that there is a long– run relationship between governance and macroeconomic variables. The Real Gross Domestic product has a positive impact on per capita income at 10% and other variables did not have a significant impact on per capita income. While, short–run ARDL error correction model result indicated that lag three inflation rate, current year interest rate, lag three interest rate and lag two broad money supply have a negative significant effect on per capita income. While the current year's Gross Domestic Product, lag three Real Gross Domestic Product have a positive significant impact on per capita income. However, the variables in the model adjusted slowly (0.11) to change in the long–run equilibrium. The R2 (0.99) showed 99% of verifications in the per capita income. The study recommended control of the inflation rate, increase in Real Gross Domestic Product, and interest rate stability in Nigeria.