Macro Effect of Global Financial Crisis on Nigerian Economy

Abstract

This study examined the macro effect of the global financial crisis on Nigerian economy using key economic variables. It adopted the Error Correction Mechanism (ECM) technique to analyse the time series data from secondary sources. The study used Gross Domestic Product (GDP) as the dependent variable, as well as, a measure of economic growth while the other key variables such as the Inflation Rate (INF), Money Supply (MS) and Foreign Direct Investment (FDI) represent the explanatory variables. The results revealed a positive relationship between GDP and FDI as well as MS, while a negative relationship was found between GDP and Inflation. The study recommended among others; that to reduce or eliminate completely the negative effect of the global financial crisis, the government and the monetary authority must formulate and implement policies that will reduce inflation, diversify the economy as well as encouraging local and foreign investors.