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Macro-econometric modelling for the Nigerian economy: A growth-poverty gap analysis

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  • Akanbi, Olusegun A.
  • Du Toit, Charlotte B.

Abstract

This study develops comprehensive full-sector macro-econometric models for the Nigerian economy with the aim of explaining and providing a long-term solution for the persistent growth-poverty divergence experienced by the country. The models are applied to test the hypothesis of existing structural supply-side constraints versus demand-side constraints impeding the economic growth and development of the country. A review of the historical performance of the Nigerian economy reveals significant socio-economic constraints as the predominant impediments to high and sticky levels of poverty in the economy. Thus, a model which is suitable for policy analyses of the Nigerian economy needs to capture the long-run supply-side characteristics of the economy. A price block is incorporated to specify the price adjustment between the production or supply-side sector and real aggregate demand sector. The institutional characteristics with associated policy behaviour are incorporated through a public and monetary sector, whereas the interaction with the rest of the world is represented by a foreign sector, with specific attention being given to the oil sector. The models are estimated with time-series data from 1970 to 2006 using the Engle-Granger two-step co-integration technique, capturing both the long-run and short-run dynamic properties of the economy. The full-sector models are subjected to a series of policy scenarios to evaluate various options for government to improve the productive capacity of the economy, thereby achieving sustained accelerated growth and a reduction in poverty in the Nigerian economy.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 1-2 (January)
Pages: 335-350

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:335-350

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Web page: http://www.elsevier.com/locate/inca/30411

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Keywords: Macro-econometric modelling Economic growth Poverty Nigeria;

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References

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  1. du Toit, Charlotte & Moolman, Elna, 2004. "A neoclassical investment function of the South African economy," Economic Modelling, Elsevier, vol. 21(4), pages 647-660, July.
  2. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-76, December.
  3. Bayraktar, Nihal & Fofack, Hippolyte, 2007. "Specification of investment functions in Sub-Saharan Africa," Policy Research Working Paper Series 4171, The World Bank.
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  7. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  8. Bernhard G. Gunter & Marc J. Cohen & Hans Lofgren, 2005. "Analysing Macro-Poverty Linkages: An Overview," Development Policy Review, Overseas Development Institute, vol. 23(3), pages 243-265, 05.
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  10. N. Lind, 1993. "A compound index of national development," Social Indicators Research, Springer, vol. 28(3), pages 267-284, March.
  11. Rudiger Dornbusch, 1980. "Exchange Rate Economics: Where Do We Stand?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 11(1, Tenth ), pages 143-206.
  12. Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
  13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  14. Christian H. Beddies, 1999. "Investment, Capital Accumulation, and Growth," IMF Working Papers 99/117, International Monetary Fund.
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Cited by:
  1. Akanbi, Olusegun Ayodele, 2013. "Macroeconomic effects of fiscal policy changes: A case of South Africa," Economic Modelling, Elsevier, vol. 35(C), pages 771-785.

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