The threshold effects of inflation rate, interest rate, and exchange rate on economic growth in Nigeria
The study examines the optimum threshold effects of interest rates, inflation rates, and exchange rates in stimulating economic growth in Nigeria. The study adopts the threshold regression technique to ascertain the optimal benchmark beyond which these macroeconomic variables hurt growth. The result...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2025-12-01
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| Series: | Cogent Economics & Finance |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2025.2460066 |
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| author | Olajide O. Oyadeyi Tolulope T. Osinubi Munacinga Simatele Oluwadamilola A. Oyadeyi |
| author_facet | Olajide O. Oyadeyi Tolulope T. Osinubi Munacinga Simatele Oluwadamilola A. Oyadeyi |
| author_sort | Olajide O. Oyadeyi |
| collection | DOAJ |
| description | The study examines the optimum threshold effects of interest rates, inflation rates, and exchange rates in stimulating economic growth in Nigeria. The study adopts the threshold regression technique to ascertain the optimal benchmark beyond which these macroeconomic variables hurt growth. The results of interest rate-economic growth thresholds suggest targeting an average monetary policy rate of 16.5%, a prime lending rate of 20%, and a maximum lending rate of 30%. The results of inflation-economic growth thresholds suggest targeting a headline inflation rate of 9%, while core inflation of 8.7% and food inflation of 12.7% are all growth-enhancing for Nigeria. Lastly, the results of exchange rate-economic growth thresholds suggest that targeting a quarterly depreciation of not more than 2.4% for the official exchange rate and a quarterly depreciation of not more than 2.5% for the unofficial exchange rate are growth-enhancing for Nigeria. The results offer policymakers valuable insights, emphasising the significance of exchange rate management, interest rate management, and inflation rate management in promoting growth and emphasising the necessity of reforms to diversify exports, strengthen institutions, and improve the efficacy of monetary policy. Therefore, the study suggests that the Nigerian government should target the obtainable thresholds for growth to become sustainable. |
| format | Article |
| id | doaj-art-70b33f7f18f446b688a7ac48b25da591 |
| institution | Kabale University |
| issn | 2332-2039 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj-art-70b33f7f18f446b688a7ac48b25da5912025-02-07T06:20:56ZengTaylor & Francis GroupCogent Economics & Finance2332-20392025-12-0113110.1080/23322039.2025.2460066The threshold effects of inflation rate, interest rate, and exchange rate on economic growth in NigeriaOlajide O. Oyadeyi0Tolulope T. Osinubi1Munacinga Simatele2Oluwadamilola A. Oyadeyi3Imperial College Business School, London, UKDepartment of Economics, University of Fort Hare, South AfricaDepartment of Economics, University of Fort Hare, South AfricaDepartment of Sociology, University of Ibadan, NigeriaThe study examines the optimum threshold effects of interest rates, inflation rates, and exchange rates in stimulating economic growth in Nigeria. The study adopts the threshold regression technique to ascertain the optimal benchmark beyond which these macroeconomic variables hurt growth. The results of interest rate-economic growth thresholds suggest targeting an average monetary policy rate of 16.5%, a prime lending rate of 20%, and a maximum lending rate of 30%. The results of inflation-economic growth thresholds suggest targeting a headline inflation rate of 9%, while core inflation of 8.7% and food inflation of 12.7% are all growth-enhancing for Nigeria. Lastly, the results of exchange rate-economic growth thresholds suggest that targeting a quarterly depreciation of not more than 2.4% for the official exchange rate and a quarterly depreciation of not more than 2.5% for the unofficial exchange rate are growth-enhancing for Nigeria. The results offer policymakers valuable insights, emphasising the significance of exchange rate management, interest rate management, and inflation rate management in promoting growth and emphasising the necessity of reforms to diversify exports, strengthen institutions, and improve the efficacy of monetary policy. Therefore, the study suggests that the Nigerian government should target the obtainable thresholds for growth to become sustainable.https://www.tandfonline.com/doi/10.1080/23322039.2025.2460066Inflation rateinterest rateexchange ratethreshold regressioneconomic growthNigeria |
| spellingShingle | Olajide O. Oyadeyi Tolulope T. Osinubi Munacinga Simatele Oluwadamilola A. Oyadeyi The threshold effects of inflation rate, interest rate, and exchange rate on economic growth in Nigeria Cogent Economics & Finance Inflation rate interest rate exchange rate threshold regression economic growth Nigeria |
| title | The threshold effects of inflation rate, interest rate, and exchange rate on economic growth in Nigeria |
| title_full | The threshold effects of inflation rate, interest rate, and exchange rate on economic growth in Nigeria |
| title_fullStr | The threshold effects of inflation rate, interest rate, and exchange rate on economic growth in Nigeria |
| title_full_unstemmed | The threshold effects of inflation rate, interest rate, and exchange rate on economic growth in Nigeria |
| title_short | The threshold effects of inflation rate, interest rate, and exchange rate on economic growth in Nigeria |
| title_sort | threshold effects of inflation rate interest rate and exchange rate on economic growth in nigeria |
| topic | Inflation rate interest rate exchange rate threshold regression economic growth Nigeria |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2025.2460066 |
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