THE DETERMINANTS OF DOMESTIC INVESTMENT IN NIGERIA: A NEW EVIDENCE FROM NON-LINEAR AUTOREGRESSIVE DISTRIBUTED LAG (NARDL) MODEL

Joseph David, Musa Abdullahi Sakanko () and James Obilikwu ()
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Musa Abdullahi Sakanko: Department of Economics, University of Jos, Nigeria
James Obilikwu: Department of Economics, IBB University, Lapai, Nigeria

Economics and Management, 2020, vol. 17, issue 2, 1-25

Abstract: This study employs an extended Nonlinear ARDL cointegration approach to examine the determinants of domestic investment in Nigeria over the 1980-2018 period. The result from bound testing reveal the presence of cointegrating relationship between domestic investment and the included variables. The empirical evidence demonstrates that domestic investment in Nigeria is determined by inflation, real interest and exchange rate, government spending, electric power consumption, savings, per capita income, credit to private sector and the interaction between government spending and oil price in the short-run; and inflation, interest and exchange rate, government spending, internal conflict, savings, and interaction between oil price and government spending in the long-run. The results also suggest that the impact of increase in interest, inflation and exchange rate is statistically different from their decrease. In essence, this study recommends the increase in government capital expenditure, savings, diversification of the economy, reduction of lending interest rate, maintenance of investment-friendly inflation rate, and conflicts control.

Keywords: Investment; Interest rate; inflation; exchange rate; government; internal conflict; Nigeria; NARDL (search for similar items in EconPapers)
JEL-codes: E21 E22 E62 H54 O16 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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