ABSTRACT

This study examined the relationship between economic growth and some selected macroeconomic variables (inflation, interest and exchange rate, unemployment rate and balance of payment) over a period of 36 years ranging from 1981 to 2015 using a time series data. The study employed the ordinary least squares estimation technique in carrying out a quantitative econometric investigation. Furthermore a co-integration test was conducted using the Engle and Granger two steps method to enquire if there is any form of long run relationship amongst the observations. The study found out that balance of payment, exchange rate and interest rate are positive but yet insignificant at explaining economic growth in Nigeria. The study further revealed that inflation rate is negative and significant at explaining economic growth in Nigeria. Finally, the study further showed that unemployment rate is negative and insignificant at explaining economic growth in Nigeria. Based on the findings, the study recommended that that the policy maker should take tight policies against reduction of inflation growth in the country by implementing the tools such as controlling money supply in the market through open market operation, setting up interest rate and setting of bank reserve requirement.