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

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

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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Article provided by Elsevier in its journal Economic Modelling.

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

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:1:p:335-350
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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