Macroeconomic Policies and Economic Growth: An Investigation of the Impacts in Nigeria

Being faced with the challenge of maintaining real economic growth, successive Nigerian governments have over time employed various economic management policies to drive the economy from the less desirable to more desirable real growth performance experience. Predicated on this prelude, this study empirically examined how macroeconomic policies (monetary policy tools of broad money supply and real interest rate, fiscal policy tools of capital expenditure and tax revenue, and trade policy measures of trade openness and official exchange rate) impacted on Nigeria’s economic growth from 1985 to 2023. Applying the Autoregressive Distributed Lag (ARDL) measurement procedure on the yearly secondary series of the variables gathered from the statistical bulletin of the nation’s Central Bank, the outcome indicated that broad money supply, capital expenditure and trade openness exerted short and long runs positively significant influence on the economy’s real growth experience. Tax revenue in its one-year lagged form appeared to have contributed positively and significantly to short-run real growth rate but only positively insignificant in the long-run. However, lending rate appeared significantly negative on the explained variable while official exchange rate negatively and insignificantly influenced the regressand over both terms. Relying on the empirical estimates, it is concluded that; the selected macroeconomic policies’ measures made encouraging and inverse contributions to Nigeria’s real economic growth experience. Thus, it is suggested that monetary policy mix to ensure stable and production-linked broad money growth accompanied by market friendly lending rate; expansionary capital expenditure over recurrent spending to create enablers for private investment, aimed at broadening the tax base, as well as greater openness supported by stable and market-reflective official exchange rate should be pursued by the monetary, fiscal and trade policies’ authorities to improvement the country’s real GDP growth.