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| Impact of Rational Expectation Hypothesis on the Growth of Nigeria Economy |
Bayo L.O. Kazeem (Ph.D.), Oyedeji Kayode
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Abstract:
The paper examined the impact of the rational expectation hypothesis on the growth of the Nigerian Economy. The study was carried out to fulfill 3 main objectives which are: to assess the performance of the Nigerian Economy, the rational expectation hypothesis in Nigeria and determine whether Rational expectation hypothesis explains the growth of the Nigerian Economy. Detailed review of literature was carried out on conceptual, theoretical framework and empirical evidences. Econometric tools such as correlation analysis and trend analysis was used and it was found that there exists a strong positive correlation between the growth rate of the actual Nigeria's consumer price index and the 12-month moving average of the consumer price index (which was used to capture the overall economic agents' expectation). The real GDP of the economy has also been on the rise during the period under study, although certain shocks was encountered which led the economy to a recession at some point. And it was observed that ability to use information by economic agent are affected by their literacy level, literacy level which is very low in Nigeria. The paper thus recommended that the government should invest more into education of her citizens, encourage research and promote data collection institutes and also let the individual agents in the economy play more active role in policy formulations.
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