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Research Article Open access CC BY 4.0

Modelling Short-run Dynamics of Macroeconomic Variables on GDP in Ecowas Countries Using Panel Vector Autoregression Model

K. Ajao, M. O. Adenomon

Asian Journal of Probability and Statistics · pp. 1–13 · Published 19 May 2023

10.9734/ajpas/2023/v22i4488

Abstract

This study implemented Panel Vector Autoregression (PVAR) Model to examine short-run dynamic relationships between inflation rate, population and unemployment rate as function of Gross Domestic Product (GDP) for Economic Community of West Africa States (ECOWAS) counties. To achieve this, secondary data was sourced for Population, Inflation rate, Unemployment rate and GDP from National Bureau of Statistics, Nigeria and ECOWAS office Nigeria covering from 1991 to 2020. The study implemented PVAR (1) and PVAR (2) models but only PVAR (2) model fulfilled the stability condition. Results from the analysis PVAR (2) model for GDP shows that GDP, population, inflation rate and unemployment rate at lag 1 are all positively related to GDP but only GDP and population at lag 1 are significant (P<0.05). While at lag 2 for GDP model, inflation rate and unemployment rate are negatively related to GDP though only GDP and population were significant (P<0.05). This study therefore concluded and recommended that in the short run, previous GDP and population data are significant in determining current GDP in ECOWAS countries.

PVAR ECOWAS GDP inflation unemployment population

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