This reviewed on the relationship between unemployment, interest rate

This
research work has been concerned with empirical evidence about “Interest Rate
and Unemployment on Economic Growth in Nigeria” using a quarterly time series
data for the Nigeria economy spanning from 2000Q1 through 2016Q4.

            The
study started with the introduction of the basic concepts on the topic in
question. Within the framework of this study, a good number of views and
opinions of writers were reviewed on the relationship between unemployment,
interest rate an economic growth in Nigeria. Chapter two is however concerned
with the review of relevant literatures (theoretical, empirical and conceptual).
Chapter three presents the methodology and analytical framework of the study
while Chapter four is concerned with the analysis and interpretation of
empirical findings by empirically analyzing the impact of interest rate and
unemployment on economic growth in Nigeria.

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The study employed the Johansen Multivariate Co-integration
estimation technique to ascertain the long-run association between
unemployment, interest rate and gross domestic product. Sequel to the test of
long-run relationship among the variables in the model, the Augmented Dickey
Fuller (ADF) test of unit root was employed to discern the time series
properties of the employed variables in the model. Consequently, in order to examine the causal relationship, the Toda-Yamamoto procedure
and the Fourier Approximation to capture for structural breaks was employed
duly.

The
Johansen Multivariate Co-integration estimated long-run model affirmed the
presence of long-run relationship among the variables in the model given the
Trace statistics as well as the Max-Eigen statistics indicating more than one
co-integrating equation(s). Prior to testing the unit root test of
stationarity, the trend analysis revealed that Gross Domestic Product and
Unemployment rate depicts an upward trend while the Interest rate variable
depicts nil trends. However, the Augmented Dickey Fuller (ADF) test of unit
root showed that two variables in the model were not stationary at level,
however, they only became stationary at first difference and thus integrated of
order I(1). Consequently, the Toda-Yamamoto
causality analysis revealed the existence of a univariate causality running
from Interest rate to Growth at 0.1 sig level (10%) and no causality running
through the other variables. In respect to the Fourier approximation of the
Toda-Yamamoto, it reveals univariate causality running from interest rate to
growth and from interest rate to unemployment rate at 0.05 (5%) sig. level,
while no causality between growth and unemployment rate