PRUDENT MACROECONOMIC MANAGEMENT AND POVERTY REDUCTION: EMPIRICAL EVIDENCE FROM NIGERIA

Abstract

This study employs the ARDL bound testing technique to empirically investigate the impact of prudent macroeconomic management on poverty reduction in Nigeria from 1980 to 2017. Empirical results indicates the existence of co-integrating (long-run) relationship between poverty and macro-economic variables (economic growth, inflation rate, exchange rate, employment rate, Balance of Payments, loan and credit, lending interest rate, agricultural sector’s growth, and democracy). In addition, the results demonstrate that in the short-run, the past value of poverty rate, economic growth, exchange rate, Balance of Payments, and lending interest rate have a significant negative impact on poverty, while employment rate impact poverty positively in the short-run. Therefore, recommended the policy makers should put in place police programmes that will increase the growth of Nigerian economy by increasing effective loan and credit, employment and jobs, Balance of Payments surplus, agricultural growth, and democracy while reducing and stabilizing the general price level, exchange rate, and lending interest rate.