Modeling the Impact of Agriculture, Export Earnings and Inflation on Gross Domestic Product Using the Generalized Least Square (GLS) Approach

The paper explored the impact of Agriculture, export earnings and inflation on gross domestic product (GDP). Time series data were obtained from the central bank of Nigeria statistical bulletin from 1981 to 2018. Each series consist of 38 observations. Evidence from our study showed that the predictor variables (Agriculture, export earnings and inflation) were significantly joint predictors of Gross Domestic Product. The predictor variables jointly explained 68.958% of GDP. Result of the analysis also revealed that both agriculture and export earnings have a positive impact on gross domestic product reaffirming the importance of the sectors to economic growth while inflation has a negative impact on gross domestic product. With evidence that agriculture has the potential to cause economic growth, spur industrialization as well as to enhance the living condition of the nation’s majority, there should be increased investment in the development of the sector. This study also revealed that inflation is detrimental to sustainable economic growth in Nigeria. The result has important policy implications for both domestic policy makers and development partners. It also implies that controlling inflation is a necessary condition for promoting economic growth. Thus, policy makers should focus on maintaining inflation at a low rate probably single digit.