Macroeconomic Instability and Health Outcome in Nigeria

Abstract

To what extent has the instability of macroeconomic variable such as exchange rate, inflation rate, interest rate, deficit finance and external debt servicing impacted on health outcome in Nigeria and to what extent have they adjusted towards a long run equilibrium position? These are the questions this paper sought to answers for, using the unit root test, cointegration analysis and error correction mechanism. The result obtained indicate that the variable are integrated of the same order 1(0) of the variables and health outcome in Nigeria. The error correction mechanism also supports the existence of contegration between the instability of the variables from the short-run disequilibrium position to the long-run equilibrium position in the course of determining health outcome in Nigeria. Of all the variables considered for the study, it is only the instability in exchange rate that diverged away from the long-run equilibrium position, thus fulfilling our initial a-priori expectation, which states that the more unstable the nation’s exchange rate regime, the less will be the outcome of health care in Nigeria. Given this result, measures that will stabilize the nation’s exchange rate were suggested.