DETERMINANTS OF PRIVATE CONSUMPTION IN NIGERIA

Abstract

This study intend to examine some factors that determine consumption in Nigeria from 1974 to 2021. The main objective of the study is to investigate the determinants of private consumption as the dependent variable while using households income(proxy for compensation to employees),inflation rate ,interest rate  and government consumption as selected independent  variables. The study employ Granger causality test for significant check on the causal relation , dynamic ordinary least square(DOLS) and the autoregressive distributive lagged(ARDL)   techniques for estimation of  long-run relation of  these variables, where also ARDL dual advantage is significant  benefit to estimate the short run effect of the relationships between the variables makes the study more robust . The DOLS and ARDL cointegration  results  show the  presence of long run relation between households income   and private consumption  . The short run (ECM) has shown that households income and government consumption influence private consumption and  their respective  effect is insignificant. The Granger causality result  also  show  causality from  households income  to private consumption. This study recommends that appropriate policies  should be formulated on how best to stimulate the various aspects of private consumption to curb any form of reduction in private consumption in Nigeria.