A FMKL-GLD Quantile Method for Estimating Economic Growth in Nigeria in the Presence of Multicollinearity and Outlier
Keywords:
conomic Growth, Internal Debt, External Debt, Interest Rate, Exchange Rate, Trade Openness, Multicollinearity, Outlier, GLD, FMKL-GLD Quantile Regression Method
Abstract
Nigeria’s economic growth posed to be a serious concern to policymakers, economics and scholars due to the challenges of economic characteristics, consequences and contradictions. Despite the effort made by the Central Bank of Nigeria in implementing several policies such as tightening of monetary policy rate and heavy borrowing for infrastructural development to stimulate economic growth in the past few years. The economic growth in Nigeria between 1999-2007 was 6.95 percent, between 2008-2010, it was stood 7.98 percent and it was 4.80 percent between 2011-2015 and from 2016 till day the economic growth stood at 0.81 percent. In this study, we estimate parameters to determine Nigerian economic growth in the presence of multicollinearity and outliers. We employed the FMKL-GLD quantile model to quarterly data from 1986 to 2021 obtained from the Central Bank of Nigeria. Exploratory data analysis (EDA) and diagnostic test carried out ascertained the presence of multicollinearity and outlier. However, it was discovered that in model that INDT, RINR, REXR and OPEN contributed positively to the economic growth to the turn of 0.15%, 0.24%, 0.06% and 1.76% while, it was revealed that EXDT contributed negatively to the economic growth in Nigeria thus, reduced economic growth by 0.02% and as such showed the tendency and potential macroeconomic variables under study as a veritable determinant of economic growth. The location, scale and space parameters , , , and for the fitted FMKL-GLD model were -0.0253, 34.1488 -0.3303, and -0.5758. Therefore, it can be concluded based on the location, scale and space parameters from FMKL-FGLD and GLD Q,Q plots as well as the estimated parameter of RGDP, FMKL-FGLD was the best model that described the economic situation in Nigeria by showing that economy was growing in retrogressive direction and the need for drastic effort and strong willed to curtail the situation. To achieve this, the adoption of economic openness to the development and the growth of economy in Nigeria is a veritable policy direction that must be strictly followed.References
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[3] Lawali, B. Z., Machief, P. E. and Aliyu, T. K. Exchange rate and economic growth nexus: An impact analysis of the Nigerian economy, Journal of Research in Emerging Markets, 2(4), 58-67 (2020)
[4] Sunday, E. and Ahmed, B. M. Dynamic Impact of Trade Openness on the Economic Growth in Nigeria. International Journal of Engineering and Advanced Technology, 8(5C) 606-616, ,(2019)
[5] Obayori, J. B., Krokeyi, W. S. and Kakain, S. External debt and economic growth in Nigeria. International Journal of Science and Management Studies, 2(2) 1-6 (2019)
[6] Moh’d AL-Tamimi, K. A. and Jaradat, M. S. Impact of external debt on economic growth in Jordan for the period (2010-2017). International Journal of Economics and Finance, 11(4) 114-118 (2019)
[7] Odubuasi, A. C.Uzoka, P. U. and Anichebe, A. S. External debt and economic growth in Nigeria. Journal of Accounting and Financial Management, 4(6) 98-108 (2018)
[8] Ademola, S. S., Tajudeen, A. O. and Adewumi, Z. A. External debt and economic growth of Nigeria: An empirical investigation. South Asian Journal of Social Studies and Economics, 1(2), 1-11 (2018).
[9] Al Kharusi, S. and Ada, M. S. External debt and economic growth: The case of emerging economy. Journal of Economic Integration, 33(1), 1141-1157 (2018)
[10] Odubuasi, A. C.Uzoka, P. U. and Anichebe, A. S. (2018). External debt and economic growth in Nigeria. Journal of Accounting and Financial Management, 4(6), 98-108 (2018)
[11] Ijirshar, V. U. Impact of trade openness on economic growth among ECOWAS Countries: 1975-2017, CBN Journal of Applied Statistics, 10(1), 75-96 (2019).
[12] Ezeuchenne, K. International Trade and Economic Growth in Nigeria. Journal of
Humanities and Social Science, 22(6), 33-43 (2017).
[13] Da'Silva, C. Impact of Trade Openness on the Output Growth in Nigeria. British Journal of Economics, Management and Trade, 4(5), 755-768 (2014)
[14] Oguntegbe, K. F. and Alexander, V. Enhancing Economic Competitiveness in Nigeria: The Roles of Exchange Rate and Interest Rate, Global Scientific Journal, 7(6), 526-536 (2019)
[15] Ufoeze, L. O., Okuma, C. N., Nwakoby, C. & Alajekwu, U. B. Effect of Foreign exchange rate fluctuations on Nigerian economy, Annals of Spiru Haret University Economic Series, Issue 1, 105-122 (2018)
[16] Su, S. A Discretized Approach to Flexibly Fit Generalized Lambda Distributions to Data. Journal of Modern Applied Statistical Methods, 4(2), (2005). Retrieved from http://digitalcommons.wayne.edu/jmasm/vol4/iss2/7
[17] Ebiwonjumi, A., Chifurira, R. and Chinhamu, K. An Efficient Estimation Technique for investigating Economic Growth and its Determinants for Nigeria in the Presence of Multicollinearity, International Journal of Finance & Banking Studies, Vol. 11, no. 1, pp., 107-119 (2022)
[18] Ramberg, J. S., & Schmeister, B. W. An approximate method for generating asymmetric random variables. Communication of the ACM, 17, 78-82 (1974)
[19] King, R. A. R., & MacGillivray, H. L. A Starship Estimation Method for the Generalized Distributions. Australian & New Zealand Journal of Statistics, 41(3), 353-374 (1999)
[20] Ramberg, J. S., Dudewicz, E. J., Tadikamalla, P. R., and Mykytka, E. F. A probability distribution and its uses in fitting data. Technometrics, 21(2), 201-214 (1979)
[21] Chalabi, Y., Scott, D. J., & Wuertz, D. Flexible distribution modeling with the generalized lambda distribution (2012) Retrieved from https://mpra.ub.uni-muenchen.de/43333/
[22] [Chalabi, Y., Scott, D. J., & Würtz, D. The generalized lambda distribution as an alternative to model financial returns. Working paper, Eidgenössische Technische Hochschule and University of Auckland, Zurich and Auckland. (2010). Retrieved from https://www.rmetrics.org/sites/default/files/glambda_0.pdf
[23] Freimer, M., Kollia, G., Mudholkar, G. S. and Lin, C. T. A study of the generalized Tukey lambda family. Communications in Statistics-Theory and Methods, 17(10), 3547-3567 (1988)
[24] Su, S. Fitting single and mixture of generalized lambda distributions to data via discretized and maximum likelihood methods: GLDEX in R. Journal of Statistical Software, 21(9), 1-17 (2007a)
Published
2024-02-29
How to Cite
Ebiwonjumi, A., Chifurira, R., & Chinhamu, K. (2024). A FMKL-GLD Quantile Method for Estimating Economic Growth in Nigeria in the Presence of Multicollinearity and Outlier . Statistics, Optimization & Information Computing. https://doi.org/10.19139/soic-2310-5070-1743
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Research Articles
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