MACROECONOMIC DYNAMICS AND THE REAL ECONOMY IN SUB -SAHARAN AFRICAN COUNTRIES: A STUDY OF NIGERIA, SOUTH AFRICA AND GHANA

Abstract This research examined the impact of macroeconomic dynamics on the real economy of three sub-Saharan African nations over a forty-year period, spanning from 1981 to 2020. The Augmented Dickey-Fuller (ADF) test revealed that the dataset exhibited a combination of integrated levels and first difference variables, necessitating the utilization of the autoregressive distributed lag (ARDL) model. Primarily, the findings indicate that the effect of macroeconomic indicators on GDP differed across Nigeria, South Africa, and Ghana. In the prolonged term, Nigeria's economy experienced a substantial negative impact from the exchange rate and discount rate, with inflation displaying a negative and inconsequential effect, while the unemployment rate had a positive yet insignificant influence on Nigeria's GDP. South Africa's GDP was significantly and adversely affected by the exchange rate and inflation in the long run, whereas the discount rate and unemployment rate had a negative and insignificant impact on South Africa's GDP over time. Ghana's long-term GDP was notably and negatively influenced by the exchange rate, discount rate, and unemployment rate, while inflation had a negative and inconsequential effect. The error correction mechanism within the ARDL model indicated that GDP in all the examined countries was influenced in varying manners by the chosen macroeconomic indicators. In the short term, the exchange rate, inflation rate, discount rate, and unemployment rate were significant factors affecting Nigeria's GDP; for South Africa, GDP was notably influenced by the exchange rate, discount rate, and unemployment rate in the short term, while Ghana's GDP was significantly impacted by inflation, discount rate, and unemployment rate in the short term. From a policy standpoint, these results are particularly relevant to governmental bodies tasked with the management of the economy. Keywords: Macro-economic indicators, GDP,ARDL, Exchange rate, Discount rate, Inflation rate.