ESTIMATING THE RESPONSE OF INDUSTRIAL OUTPUT GROWTH TO INSTITUTIONAL POLICY CHANGES IN NIGERIA

AUTHORS: Adelowokan, O.A1, Babasanya, A.O.B1, Oyebamiji, F.F2

ABSTRACT:This research study examines the dynamic effects of institutional policy changes on industrial output growth in Nigeria. We estimated a time series VAR model for Nigeria using a quarterly dataset spanning from 1996 to 2018. The study explores a system that includes industrial output, institutional quality variables (financial, economic, and political), key factor inputs (investment and labour), and control variables (FDI and trade openness). The study found that shocks in the financial, economic and political institutions accounted for 14.45%, 11.20%, and 5.01% response in industrial growth while key factor inputs and control variables accounted for 10.38% and 0.13% in Nigeria respectively. Specifically, contract intensive money has the highest shocks from the total financial institution shocks followed by lending rate and financial deepening shocks. For economic institutions, it is control of corruption, afterward, rule of law, government effectiveness, and regulatory quality. In the case of political institutions, political stability and the absence of violence has the highest shocks followed by voice & accountability.