Macroeocnomic Dynamics on Domestic Production in Nigeria: A Study of the Cement Industry
DOI:
https://doi.org/10.31150/ajebm.v7i6.2798Keywords:
Gross Domestic Product, Cement Production, Unemployment rate, Inflation rate, Exchange rate and Interest rateAbstract
This research investigated the influence of macroeconomic factors on domestic output, specifically focusing on the Nigerian cement sector from 1981 to 2022. The data was first assessed using descriptive statistics and Stationarity assessment. The test revealed that several of the variables did not follow a normal distribution and were not stationary. The presence of order integration at both the level and first level difference required the use of the Autoregressive Distributed Lag (ARDL) approach. The results indicated a long-term relationship between cement production and variables such as exchange rate, inflation rate, interest rate, and unemployment rate. However, it was determined that unemployment rate did not have a significant statistical impact. In the long term, the value of cement production was shown to be negatively affected by changes in exchange rates and interest rates. Conversely, the coefficients for inflation rate and unemployment rate were found to have a positive influence. Over the long term, the currency rate, inflation rate, and interest rate had a substantial impact, although unemployment did not have a significant impact. The study revealed that both the inflation rate and interest rate had a substantial influence on cement output in the short-term. The findings suggested that the sustainability of cement production is contingent upon effective regulation of the macroeconomic economic environment. The post-estimation tests revealed the absence of serial correlation, heteroscedasticity, and irregularity in the residuals, indicating that the model is efficient and its estimator is unbiased.
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