ABSTRACT

The aim of this paper is to examine the effect of macroeconomic variables which includes inflation rate, interest rate and exchange rate on economic growth of Nigeria. The data for the study were derived mainly from the secondary sources which includes; National Bureau of Statistics, Central Bank of Nigeria Bulletins, Bullions, research and statistics publication and economic report of various issues,the secondary data has been taken for 30 years from 1986 to 2016.Ordinary Least Square statistical technique was used to assess the degree of influence the variables have on each other.The results from ordinary least square (OLS) regression analysis describe that inflation rate had positive and insignificant effect on economic growth. Interest rate had a negative and significant effect on economic growthwhile exchange rate had positive and significant effect on the economic growth. The empirical results derived indicate that all the variables of interest were stationary after their first differencing. The study found co integration relationship between real GDP per capita (economic growth) and its macroeconomic factors. Based on the results and analysis it is suggested that The government should fashion out ways of maintaining the inflation rate at a threshold not exceeding 2-3 percent, Government should guard against increasing interest rate, More export-oriented policies should be pursued by the government while maintaining the floating exchange rate regime.