Macroeconomic Stability and Life Expectancy in Nigeria: A Dynamic Modelling Approach

Abstract

Macroeconomic stability and health status are crucial in developing nations, as they impact citizens’ purchasing power, consumption patterns, and income disparity. Inflation, unemployment, money supply, interest rates, and exchange rates can affect health, leading to economic stress and mental imbalance. In Nigeria, studies show a decrease in health status due to macroeconomic imbalances, deteriorating labour productivity, and healthcare accessibility. However, to juxtapose these threats, the study tests the hypothesis that macroeconomic stability does not have a significant effect on health status in Nigeria. It is on this that the study piques Nigeria’s health status from 1990-2021, focusing on macroeconomic stability and health outcomes using life expectancy, inflation, interest rates, exchange rates, and unemployment rates, sourcing its data from the 2022 World Development Indicators. The study showed that there exists a long-run equilibrium condition between macroeconomic stability and health status was maintained which enacts the appropriate choice of the Autoregressive Distributed Lag, with a response mechanism for short-run equilibrium of 9.2%. The study found that macroeconomic stability in Nigeria is not significantly impacted by inflation, interest, exchange rates, or unemployment rates. However, increased unemployment and depreciated exchange rates significantly impact health outcomes. The study suggests enhancing macroeconomic stability in Nigeria by lowering interest rates, facilitating trade to attract investors, and expanding the labour force for stable economic liberation.