Nigeria's economic growth: performance and determinants

Abstract

In this paper, some recent developments in time series econometrics, which is of great potential for extending the frontier of economic research is applied to Nigerian data in order to estimate a production function type equation as well as examine the key macroeconomic determinants of economic growth in Nigeria. Of particular application is the vector error correction modeling technique. Apart from the determination of criteria for selecting the lag length, the paper also explored variance decomposition and effect of shocks through the impulse response function. Results from the econometric analysis revealed that output was elastic to capital injection in the short-term and that all the other macroeconomic variables were significant in explaining growth in Nigeria. The predictive power of the model was quite high and tracked the long-run growth path.