ECONOMIC GROWTH, UNEMPLOYMENT AND INTEREST RATE IN NIGERIA: APPLICATION OF FOURIER TODA-YAMAMOTO

Emmanuel Oluwaseun Agboola, Ojo Johnson Adelakun, Godwin Oluwatosin Yusuph

Abstract


It has been an actual economic fact that the size of the labour force coupled with the size of the economy's capital formation regarding investment can directly impact a country's GDP (growth). The study empirically investigates the interaction between interest rate, unemployment and economic growth using a time series data spanning from 2000Q1 – 2016Q4. The study applied the Fourier Toda-Yamamoto Approximation to check for any causal relationship among variables. The Fourier Toda-Yamamoto approximation causality shows a univariate causality running from interest rate to growth and interest rate to unemployment rate at 0.05 (5%) significant level while no causality was found to exist between the unemployment rate and growth. The paper recommends that the Nigeria government should endeavour to rebrand her agricultural sector. Thus, this slow down the rising unemployment rate, formulate policies that help to discourage gender discrimination in the labour market participation, create a conducive environment for foreign direct investment to thrive to ensure the country's full participation in the global business opportunities that would help create jobs for teeming populate.

KEYWORDS: Economic Growth, Unemployment rate, Interest rate, Augmented Dickey-Fuller, Fourier Toda-Yamamoto approximation



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ISSN : 2251-1563