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# Nul alte r 0 r 1 079922 56194 2758434 00000 93911

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Nul Alte r= 0 r ≥ 1 0.79922 56.194* 27.58434 0.0000 93.911* 47.85613 0.0000 r≤ 1 r ≥ 2 0.49927 24.209* 21.13162 0.0178 37.717* 29.79707 0.0050 r≤ 2 r≥ 3 0.24417 9.7979 14.26460 0.2255 13.507* 15.49471 0.0975 r≤ 3 r ≥ 4 0.10057 3.7100* 3.841466 0.0541 3.7100* 3.841466 0.0541 r indicates the number of co-integrating vectors. * Indicates rejection of the null hypothesis at 5% level of significance. Source: Authors’ computation using E -views 7.1 From Table (3), the result revealed that both maximum eigen value and Trace statistics indicates the rejection of null hypothesis of no co-integration among the variables at 5% level of significance. For both methods employed the result shows that there are at least two co-integrating vectors. Hence, the existence of long-run equilibrium relationship among the non-stationary variables justifies the use of VECM.

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Impact of Money Supply and Inflation on Economic Growth in Nigeria (1973-2013) DOI: 10.9790/5933-0803042637 32 | Page 4.2: Analysis of Inferential Statistics 4.2.1. Long Run Estimates Having confirming the existence of long run relationships in between the variables in the model, a long run vector error correction model normalizes on dependent variable (GDPGR) was estimated, the result of which is presented below. Table 4: Long-run Coefficient of the Co-integrating Vector Normalizes on GDPGR Note: (*), (**), and (***) are levels of significant at 10%, 5%, and 1% respectively. Figures in the parenthesis are t-values (Adjusted Coefficient) Source: Authors’ computation using E -view 7.1 In the lung-run, the normalized co-integration equation in the table (4) above revealed that money supply ( BMGDP ) is positively related to economic growth and significant at 10%, in conformity with our a priori expectation and also in line with the work of Ahmad and Suleiman, (2011), Henri and Henri (2011), and Mishra (2012). This implies money supply is an increasing function of economic growth in the long-run, meaning that as money supply increases, economic growth also does. The above tends to lend support to the relevance of monetary expansion policies included in some developmental programmes like seven point agenda and transformation agenda, executed by the past administrations. The above is in line with economic theory which posits that expansionary monetary policy is a declining function of interest rate (cost of borrowing), which increase personal income, this further leads to increase in aggregate demand and triggered investment which eventually led to increase in economic growth. In relation to inflation (INFD) and Interest rate (RINTR), both revealed a long-run negative relationship with economic growth at 5% and 1% level of significant respectively. This results are in line with the work of Taiwo (2011a) and Ogunmuyiwa (2012) respectively. This implies that inflation and interest rates do not promote economic growth in the long-run. Inflation in the long-run becomes a threat to national development with it deteriorating impact on the value of money. A continuous decline in the real value and the purchasing power of money discourages long term investment, resulting into declining aggregate demand due to fall in purchasing power of money. In addition, high rate of inflation does not encourage investments in the real
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• Summer '17
• ms lau

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