Economics Project Topics

Impact of Selected Macroeconomics Indicators in Selected Nation in ECOWAS

Impact of Selected Macroeconomics Indicators in Selected Nation in ECOWAS

Impact of Selected Macroeconomics Indicators in Selected Nation in ECOWAS


Objective of the study          

The main objective of the study is to examine the impact of selected macroeconomics indicators in selected nation in ECOWAS.

The specific objectives of the study are to:

  1. evaluate the relative importance of prior income (past GDP) on current national income (current GDP) and
  2. ascertain the relative significance of macroeconomic factors (inflation rate, interest rate, exchange rate and unemployment rate) on current national income (current GDP).



Conceptual Review

This chapter looks at the various concepts relating to the inter-relationship between macroeconomic indicators and economic growth. Over the years, there has been a vast literature on how macroeconomic variables affect economic growth. This chapter gives an insight into concepts of the various variables to be used in the study. Also, the various theories associated with the macroeconomic variables as well as contributions from various researchers to the expanding literature on economic growth and macroeconomic variables are highlighted in this chapter.

Concept of Gross Domestic Product (GDP)

The Gross Domestic Product (GDP) is one of the measures of national income and output for a given country’s economy at a given period of time. The definition of GDP is based on the total market value of final goods and services produced within a country in a given period of time (usually one year) (Kira, 2018). For more than a half century, the most widely accepted measure of a country’s economic progress has been changes in its GDP (Costanza, Hart, Posner & Talberth, 2019). GDP is an estimate of market throughput, adding together the value of all final goods and services that are produced and traded for money within a given period of time (Costanza et al, 2019).

Economic growth, from the early period of economic history, engaged the attention of man and his governments. As far back as 17th and 18th centuries, writers like Adam Smith, David Ricardo, John Stuart Mill, as well as state theorists like Karl Marx, Friedrich List Karl Bucher, W Rostow, and neo classical economists such as Arthur Lewis have all been preoccupied with the quest for unearthing the forces and processes that cause a change in the material progress of man (Uwakaeme, 2015). For such authors, attention should be focused not merely on the increase in aggregate output and income but also on the total quality of standard of living and that there is yet no satisfactory measure of “quality of life” that can be applied to quantitative measure of aggregate output and income which would be acceptable to all and sundry that will stand the test of time (Uwakaeme, 2015). For such authors like Lewis (2018), the mere increase in the aggregate level of production of goods and services in an economy tells us nothing about the “quality of life” of the citizenry, given the threats of global pollution, abysmal lop-sided distribution of aggregate output and income, environmental degradation, prevalence of chronic and deadly disease, abject poverty and the absence of freedom and justice. Gross Domestic Product, therefore, has become the standard measure of economic progress, even though it was originally intended as a macroeconomic tool (Steady State Economy, 2019).

Economic growth is the increase of per capita gross domestic product (GDP) or other measures of aggregate income. It is often measured at the rate of change in real GDP.  Ullah and Rauf (2018) argued that whenever there is an increase in real GDP of a country, it will boost up the overall output, which is referred to as economic growth. Over the last decades, the macro-economic policies and economic growth relationship became contentious issues among the government policy makers and researchers .There are large number of literatures on the indicators of the economic growth in cross countries and country specific with varied submission and conclusion.

Concept of Inflation

Inflation is defined as a generalized increase in the level of price sustained over a long period of time in an economy (Lipsey & Chrystal, 1995). Inflation is a persistent rise in the price level of commodities and services leading to a fall in the currency purchasing power (Osuala, Osuala & Onyeike, 2018). Inflation is a persistent and appreciable rise in the general level of prices (Jhingan, 2021). Not every rise in the price level is termed inflation. Therefore, for a rise in the general price level to be considered inflation, such a rise must be constant, enduring and sustained. The rise in the price should affect almost every commodity and should not be temporal (Fatukasi, 2018). According to Hossain, Ghosh and Islam (2020), high inflation is bad for an economy because of its adverse effect on economic performance; zero inflation is equally harmful because it leads to eventual stagnation of the economy since its presence at a midlevel is needed for economic growth. To attain sustainable economic growth coupled with price stability continues to be the central objective of macroeconomic policies for most countries in the world today (Kasidi & Mwakanemela, 2018).

The problem of inflation is not confined to national boundaries neither is it restricted to emerging market economies of the world; it is also an over-arching challenge in the developed market economies. Nigeria as a nation is by no means immune to the menace of inflation (Osuala et al, 2018). Chude and Chude (2015) defined inflation as an economic situation where there is a general rise in prices as measured by an index such as the consumer price index (CPI) or by the implicit price deflator for Gross National Product (GNP).





The methodology employed in this study focuses on the data that will ensure a deep analysis on how macroeconomic indicators can affect economic growth in the selected ECOWAS nations. The research design, various sources of data, types of data used, method of data collection, model specification, the priori expectation from variables used, ethical considerations are specified in this chapter.

Research Design

Survey design which is empirical in nature would be employed in this study. Ex-post facto design will be adopted since the study intends to examine the relationship between the macroeconomic variables (inflation, interest rate, exchange rate and unemployment) and the level of economic growth in the selected ECOWAS nations using existing (past) data in order to determine the current effect as well as to predict future occurrences.


This study sought to examine the effect of macroeconomics indicators of selected ECOWAS Countries (Togo, Chad, Equatorial Guinea, Benin, Nigeria and Mali). Thus, for the purpose of this study, the population in order to test the implications of the model would be collected from an aggregate data on variables of interest in the selected ECOWAS nations. The entire data set for which all relevant variables (RGDP, Inflation rate, Interest rate, Exchange rate and Unemployment rate) are reported over an thirty-five year period (1981–2015).

Sample size

The study was a qualitative analysis that employed time series. Therefore, the use of secondary data for this study shows that no sample size was applied.

Sources of Data

As regards this research work, secondary data is used. Data would be sourced from CBN statistical bulletin and the World Bank data. A multiple regression analysis would be used for the analysis of the data which would consist of a fusion between the dimensions of time (time series). Quantitative research approach would be used to analyze the regression results.




This chapter presents an explicit analysis and interpretation of results of the econometric methods and tests employed in analysing the effect of macroeconomic indicators on economic growth of the selected ECOWAS nations over the period 1981-2015. Section 4.1 gives the preliminary analysis consisting of the trend analysis and the descriptive statistics of the variables, while 4.3 and 4.4 displays the stationarity test using Augmented Dickey Fuller (ADF) and Phillip Perron (PP) test and Bound test for Cointegration. Section 4.5 and 4.6 gives the Autoregressive Distributed Lag (ARDL) model result and the Granger Causality test, while section 4.7 presents the Stability and Diagnostics test for the ARDL model.



This chapter deals with the summary of the study, summary of the findings, the conclusions drawn, recommendations proffered and the suggestions for further research.


The purpose of this study was to examine the impact of selected macroeconomics indicators in selected nation in ECOWAS. The study used Nigeria over the period 1981 – 2015. The specific objective is to determine if prior income does not have a greater impact on current income and the role of the macroeconomic indicators in this trend. The study was necessitated by the need to properly analyze how the macroeconomic indicators affects past income and how past income contributes to current income in the selected ECOWAS nations. Evidence has revealed that the Nigerian economy has been growing, but this growth has failed to trickle-down to most Nigerians with the number of people living below and around the poverty line growing in an alarming rate. Despite the huge returns generated by the economy in the form of crude oil export, monetary and fiscal stimulus that were aimed at employment generation in an effort to boost current income, but with all effort not yielding significant contribution to improvement in the standard of living of the selected ECOWAS nations.

Chapter one looked into the background to the study, identified the problem which the study aimed at providing solutions to, the appropriate research question to the problem so identified and the hypothesis were also highlighted in chapter one. Also, the justification and the significance of the study as well as the operationalization of the variables and definition of key terms were contained in chapter one.

Chapter two gave an insight into the various concepts relating to the variables of interest used in the study and also a review of few theories on the variables was covered in this chapter. Some of the theories include the Classical growth theory, the Harrod-Domar growth theory, the Augmented Solow growth theory, the Endogenous growth theory, the Monetarist theory on Inflation, Structural and Rational Expectation theories, the Purchasing Price Parity, New Keynesian theories as well as Marxian theory on unemployment was reviewed. Others include the Loanable funds theory of interest and the Keynesian theory on Interest. The chapter also linked the various theories to the study and highlighted the theories for which the study would be based on. A theoretical framework for the theories was done, with the chapter concluding with the empirical review and gaps in literature.

Chapter three presented the methodology for the study. The population is described with the sample being generalized as the whole of the population since the Nigerian economy was the focus of the study. The chapter equally described the sources of data, justified the variables used in the study for the analysis of the results. Furthermore, the functional model for the study was specified in this chapter and the method of data analysis was also highlighted which was further divided into pre estimation and post estimation tests. The chapter concludes with the specification of the a priori expectation and statement of its alignment with ethical standards.

Chapter four was divided into the preliminary analysis which showed a brief trend analysis depicting a flow in the movement of the variables over the thirty-five year period covered by the study. Also, the descriptive statistics examined the mean, skewness, kurtosis, jarque-bera and probability of the macroeconomic indicators on economic growth in the selected ECOWAS nations. The results of the unit root tests were also presented in this chapter as well as the cointegration tests. Tests for causality and the results of the ARDL model concluded the preliminary tests that were conducted in the course of the analysis of data. The other part of chapter four covers the post estimation tests which included the stability and diagnostic tests and the autocorrelation and heteroskedasticity tests. Chapter four concludes with the discussion of findings and the interpretation of results which was compared with a priori expectations. Also, the theoretical findings where the results of the study was compared with the predictions of the theories used was carried out and the results were compared to past researchers conducted in similar area of interest.

Chapter five gives the summary of the study as well as findings and the conclusions drawn and recommendations made. Finally, the chapter concludes by providing suggestion for further research to be conducted in the area of interest relating to macroeconomic indicators and economic growth.


From the empirical model analysis, the study revealed that macroeconomic variables positively and negatively influence the performances of the overall economy which impacted on past income. It was observed that past income positively contribute to current income and thus the null hypothesis that past income does not contribute to current income is rejected. It was largely observed that in an effort to grow current income, government policy regarding interest rate has been somewhat contractionary in nature, and this contractionary policy failed to reduce the level of inflation experienced by the economy. The increasing interest rate on the other hand leads to the appreciation of the domestic currency which is also observed in the positively contribution of increasing exchange rate and inflation rate to economic growth, while unemployment rate impacts negatively on the level of growth that could have been attained. The linkage between these findings is that increasing level of interest rate contributed negatively to economic growth, while inflation on the other hand influences growth positively. In the same vein, appreciating exchange rate as a result of excessive demand for Naira due to increased interest rate contributed positively to economic growth, while the increasing level of economic growth failed to reduce the level of unemployment in the economy which thus means that the level of growth recorded in the Nigerian economy is a non-inclusive growth.

The major conclusion drawn from this empirical result is thus that past income as influenced by the macroeconomic variables contribute significantly to the current level of income in the Nigerian economy and thus effort must be made to make sure that this income is utilised in manners that impact positively on the standard of living of the selected ECOWAS nationsns so as to lay the groundwork for inclusive growth


Based on the findings of this study and literature reviewed, the following recommendations or policy implications were made:

The concept of inflation targeting is highly recommended so as to target the level of inflation that is consistent with the growth target of the economy which will ensure the stability of prices and consequently improved economic growth.

Policies that prohibit excessive inflow of foreign capital as a result of sustained increase in interest rate should be implemented, as excessive inflow of foreign currency will lead to the appreciation of the domestic currency which will on the other hand render exportable expensive and thus worsen the import dependency of the Nigerian economy.

A policy that ensures that the benefit of growth trickles down to the larger Nigerians is largely recommended. Social policy that leads to transfer of resources to the poor rural area is largely recommended, as this will aid their spending power which obviously impacted positively on their current income.

Also recommended are entrepreneurial initiatives by the government where individuals who are unable to actively get employed in large business organizations such as Banking, Oil and Gas, Insurance, Medicine and so on can be self-employed and hence provide a means of livelihood for themselves.

A managed flexible exchange rate system is also highly recommended to the regulatory authorities where the authorities allow the Naira to respond to the forces of demand and supply and where the authorities only intervene where they view that the local currency is not at the target currency level so as to push the economy to a better level of equilibrium than it currently is in.

Contribution to Knowledge

This study is believed to have made the following contributions to knowledge:

The study has contributed to existing literature by focusing on a developing country like Nigeria in examining in its light those macroeconomic indicators of economic growth in the selected ECOWAS nations.

The study also contributed to knowledge through the model used for the analysis of the results of the study. The addition of unemployment rate into the model allows for a proper analysis of macroeconomic indicators and economic growth as achieving a stable rate of employment in an economy is seen as a key driver for economic growth. Also, the use of the ARDL method to properly analyze the results offered a suitable analysis especially since the variables were differenced at order and first order.

This study will also assist policy makers,  the government at all levels as well as chief executives of companies and the entire populace as the output of this study will serve as a useful database and resource material in the area of macroeconomic variables and economic growth.

Suggestion for Further Research

This study focused on the period 1981-2015, and does not capture the period priori the adoption of Structural Adjusted Programme (SAP). In order to capture the true nature of macroeconomic variables impact on past and current income, it is believed that early periods must be reviewed, and the study be expanded to include data’s for 2021 so as to incorporate latest macroeconomic twist of the Nigerian economy.


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