Analysis of the Effect of Macroeconomic Variables on Poverty Incidence in Nigeria (1980-2018)
AbstractThis study explores the relationship between poverty and selected macroeconomic variables, as well as the implication of these macroeconomics variables on poverty level in Nigeria within the period 1988-2018. A total of six variables were employed in this study. They include poverty, inflation, unemployment, exchange rate, government spending, and interest rate. All the six variables were subjected to unit root test, and were found to be stationary at the first difference I (1). Using the Johansen’s co-integration technique, the levels of co-integration of the variables were determined. The variables were found to be co-integrated at 5% level of significance. The short run error correction model was used to determine the short run relationship between poverty and the macroeconomic variables in consideration. The result obtained showed that unemployment, inflation, interest rate, and exchange rate share a positive relationship with poverty, while government spending share a negative relationship with poverty. The study further concludes that all five macroeconomic variables (dependent variables) considered in this study significantly affect the level of poverty in the country, and recommends that government should endeavour to embark on enabling monetary and fiscal policies that would attract foreign investment, and that the government should effect policies that will ensure price stability, and make incentives available to local producers so as to reduce the incidence of inflation in the country.Key words: Poverty, macroeconomic unit root test, co-integration, inflation
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