Macroeconomic stability indicators and economic growth in Nigeria

The persistent rise in inflation has been exacerbated by socio-cultural dynamics, including a culture of ostentatious consumption, which compounds inflationary pressures and distorts economic growth. This paper examines the impact of macroeconomic stability on economic growth in Nigeria, focusing on status-driven spending behaviors influence inflationary pressures and their implications on human development index. The study obtained empirical evidence to examine the relationship between economic growth and inflation rates in an economy that monetary and fiscal policies may have not have effect on spending behaviors due to culture and customs. Using the Autoregressive Distributed Lag (ARDL) model, the study analyzes data obtained from Trading Economics, the World Bank, and the United Nations covering the period from 1985 to 2023. The results indicate that inflation volatility and high interest rates negatively affect human development, while exchange rate fluctuations have a weaker direct impact. Persistent economic downturns further intensify these challenges, resulting in prolonged declines in the Human Development Index (HDI), unless comprehensive policy interventions are implemented. The study recommends that monetary and fiscal policies that are aimed at controlling inflation should take cognizance of cultural and customs’ demands of the citizenry.