Macroeconomic Policy, Institutional Quality And Economic Growth In Nigeria

Abstract

This study examined the impact of macroeconomic policy, institutional quality and economic growth in Nigeria through the use of time series data for the period 1981 to 2021. The study employed monetary policy, fiscal policy as indicators of macroeconomic policy, and contract intention money as the indicator of institutional quality and the logarithm of real gross domestic product as the measure of economic growth in Nigeria. The ordinary least square (OLS) estimator was used in the estimation of the model specified in the study. The result of the estimation which was evaluated on the basis of the 5 percent level of significance, from the study revealed that monetary policy exerts a positive but insignificant impact on economic growth in Nigeria. The study findings also revealed that fiscal policy has a positive and significant impact on economic growth in Nigeria. Furthermore, the study found that institutional quality exerts a positive and significant impact on the economic growth in Nigeria. Based on the findings, the study recommended that the monetary authority (CBN) should review its policies with respect to their lending interest rate, which is expected to lead to lower cost of borrowing resulting in higher investment activity and purchase of consumer durables. The federal government should also implement measure to improve federal government expenditure since it impact is low compared to other variables with positive impact. Finally, a holistic approach of attitudinal change, systematic strengthening and institutional restructuring is also recommended for the attainment of the country’s growth plans and objectives.