Recession and the Challenge of Sustainable Economic Growth in Nigeria: An Evaluation of Macroeconomic Policies

Abstract

The recent economic recession in Nigeria was manifested shortly after the successful
democratic-to-democratic transmission of political power in 2015, against the
backdrop of continental and global economy rankings of the country as the largest in
Africa, and 24th in the world as at 2014. Based on relevant variables of datasets from
1981 to 2016, this paper employed error correction mechanism on log-linear regression
model to evaluate macroeconomic policies being implemented to stabilise and restore
the economy on the path of sustainable growth. The variables were surrogates of fiscal,
monetary, exchange rate and supply-side policies. The results showed that the
respective macroeconomic policies had mixed effects, but jointly had significant
growth-retarding effect on the country’s economy. Therefore, the paper concludes that
macroeconomic policies had heterogeneous effects, and emphasised the need for
appropriate mix of macroeconomic policies to be implemented to sustain and move the
economy out of the recession trap.

Keywords: recession, macroeconomic policies, sustainable economic growth, loglinear
regression, error correction model

JEL Codes: C22, C52, E52, E62 and F31