THE IMPACTS OF HOUSEHOLD CONSUMPTION EXPENDITURES ON ECONOMIC GROWTH: INSIGHTS FROM NIGERIA

Abstract

This study examines the impacts of household consumption expenditures alongside its determinants – Money supply, Inflation rate, Interest rates, foreign direct investment, exchange rates, past and present on Nigeria’s economic performance using Descriptive statistics, Cointegration analysis, and Autoregressive Distributed Lag (ARDL) Model/Error Correction Model (ECM) estimation techniques to analyze the data covering 1990 to 2022. The paper found a stable long-run relationship between household consumption expenditures, its determinants and economic growth in Nigeria. The empirical findings highlight the significance of household consumption expenditures, interest rates, money supply, inflation rate, FDI, and exchange rates in driving Nigeria’s long-term and short-term economic performance. The results show that significant changes in the composition of household incomes and consumption expenditures pattern can transform the national output and industrial composition of the Nigeria economy. The study concludes by recommending different policies and strategies for better economic performance in Nigeria.  Among the policies recommended are that policymakers in Nigeria should reexamine and update the current monetary and fiscal policy and use the combination of the updated monetary and fiscal policy to effectively manage and spur economic growth in line with Nigeria economic, social and political dynamics to cope with current realities. Designing and implementing a mix of short-term and long-term strategies for economic stability, with a comprehensive approach to addressing immediate challenges and long-term structural issues for sustainable and inclusive economic growth in Nigeria is pertinent in the light of current realities.

Keywords: Household Consumption Expenditures, ARDL/ECM Analysis, Nigeria, Economic Growth, Impacts.