Econometrics Analysis Of Gross National Income On Consumption Expenditure Of Federal Republic Of Nigeria Between (2011)

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Econometrics Analysis Of Gross National Income On Consumption Expenditure Of Federal Republic Of Nigeria Between (2011)


Abstract


This research work studies the gross national income on consumption expenditure of the federal republic of Nigeria from 1992 – 2011

It is aimed at fitting a prediction equation for gross national income over consumption expenditure, gross national income over time, to forecast the future national income and to test significant difference between government and private final consumption expenditures.

To achieve these, the methods of analysis employed are regression and correlation analysis and student t – test
It was observed that there is a strong positive relationship between gross national income and consumption expenditure.

In conclusion, the research reveals that there is an increase of gross national income over the years under study.

The student t – test reveal that the total government consumption expenditure is different from that of private consumption expenditure.

Based on all these findings, necessary recommendations were made.


Table of Contents


  • Title page
  • Certification
  • Dedication
  • Acknowledgment
  • Table of content
  • Abstract

Chapter One

1.0 Introduction

  • 1.1 Historical overview of central bank of Nigeria
  • 1.2 Significance of the study
  • 1.3 Aims and objectives of the research
  • 1.4 Scope of the study
  • 1.5 Definition of concepts
  • 1.6 Survey methodology
  • 1.7 Limitation of the research

Chapter Two

2.0 Literature Review

  • 2.0 Nature and scope of econometrics
  • 2.1 National income account
  • 2.2 Public versus private expenditure
  • 2.3 Source of data for the study
  • 2.4 Economic growth
  • 2.5 Review of the analysis used
  • 2.5.1 Regression analysis
  • 2.5.2 Correlation analysis
  • 2.5.3 Test of difference of two means

Chapter Three

3.0 Research Methodology

  • 3.0 Simple linear regression analysis
  • 3.1 Regression equation
  • 3.2 Simple correlation analysis
  • 3.3 Test of difference of two means

Chapter Four

4.0 Summary Of Data

  • 4.0 Data Presentation
  • 4.1 Data Analysis

Chapter Five

5.0 Summary, Conclusion and Recommendations

  • 5.0 summary of findings
  • 5.1 conclusion
  • 5.2 recommendations
  • References

Chapter one


1.0 Introduction

Econometric is a policy measures adopted in controlling inflation, employment and increasing the national output which can be meaning if we tend our appeals to empirical investigation.

This research work employs the method of econometrics to evaluate the national output of the federal republic of Nigeria.

Econometrics is the application of statistical methods for testing and quantification of hypothetical economic relationship using data. It is with the aid of econometrics that we discriminate between competing economic theories and put numerical clothing onto the successful ones.


1.1 Historical Overview of Central Bank Of Nigeria.

The central bank of Nigeria (CBN) was established by the central bank act of 1958, although legal banking of CBN recently rest mainly in the central bank of Nigeria degree no 24 of 20th June, 1991, which supersedes the acts.

The promulgation of the degree marked on important epoch because of the expanded powers conferred on the CBN to execute its primary functions as well as a collecting and using all aspects of needed statistics.

The central bank of Nigeria (CBN), in her process of executing this primary, functions returns, which are made to include both operational and administrative statistics.

These are processed to provide the balk of monetary statistics.


1.2 significance of the Study

the role of finance in a developing country such as ours cannot be over emphasized. This is because finance is one of the major inhibiting factors in the transformation of our economy from the developing one to a modern industrialized society.

This study is carried out to aid the government in economic planning and to provide useful aids in judging achievement in economic growth through national income statistics.


1.3 Aims and Objectives of the Research.

  1. To estimate the consumption expenditure functions over gross national income for the purpose of prediction.
  2. To estimate the relationship that exists between consumption expenditure and gross national income.
  3. Fitting a regression equation of gross national income over years for the purpose of prediction.
  4. To forecast the future consumptions based on gross national income trend value.
  5. To test if there is significant differences in averages of government final consumption expenditure and private consumption expenditure.

1.4 Scope of the Study

The information used in this study is extracted from the central bank of Nigeria (cbn) financial and economic review of 1992 – 2011.

The study was to cover gross national income and consumption expenditure meant of the federal republic of Nigeria.

Basically, econometrics methods of analysis would be employed on the economic variables in evaluating their performances based on the information collected.


1.5 Definition of Concepts.

Concepts and terms relating to evaluation of research study are:-

National Income

This is the market value (total money value) of all final goods and services produced in an economy as well as the incomes generated by economic agents (buyers and sellers) over a period of time usually a year.

Consumption.

It is the sum of current expenditure on goods and services either by the private or government. Consumption is the ultimate objective of economic activities to create utility so as to satisfy human wants.

The private sector constitutes the largest component of national product. This is divided into three main categories
Namely; durable consumption expenditure includes expenditures on administrative and internal security, economic services, social and community services and transfer payments.


1.6 Survey Methodology

The method of data collection employed in third study is purely secondary data collection.

All data were extracted from the CBN financial and economic review from 1992 – 2011 via the CBN website.


1.7 Limitation of the Research.

Unlike the primary data where researcher knows the condition under which the data were collected and quite aware of any limitation they may contains, the reverse is the case in a secondary data. Users of secondary data cannot have through understanding of the background as the original investigator and so he is unaware of any limitation.

Though the data that would be presented by such a financial house as CBN could be said to be accurate. Such data items and information is usually cumbersome and climsy for easy analysis. Because their accuracy in estimation may be subjected to errors particularly the cross national income

The likely limitation may be when these data were collected and estimate from source. Which is still a primary business of the data.


Chapter Five


5.0 Summary, Conclusion and Recommendation

This chapter gives the summary of all finding in the research worlk, the general conclusion and possible suggestions and recommendation are made based on the inference drawn from the research.


5.1 Summary of Findings

The estimated consumption expenditure function over gross national income is Y = 16.15 to 0.701x, shows that there is an increase of N0.701 billion in total consumption over gross national income.

A further study, using r = 0.97556 and r2 = 0.9517 i.e 95.17%, reveals that there is a strong positive relationship between consumption expenditure and gross national income. It indicates that 95.17% of the total variations in consumption expenditure can be explained by the gross national income.

Moreover, the value r = 0.97556 shows that as consumption expenditure increases or decreases so also gross national income.

Lastly, the student – t test reveals that there is significant difference in averages of both government and private final consumption expenditures.


5.2 Conclusion

Based on the inference drawn from this research work, it can be concluded that there is an increase of gross national over the year under study; also, the research reveals that as gross national income increases or decreases as total consumption expenditure.

The test difference of two means show that the government consumption and private consumption expenditures are not the same.


5.3 Recommendation

As a result of findings and experiences gained during the course of this research work, I would like to make the following suggestions.

  1. The federal government should collaborates with the financial institution and banking industry, econrage and create awareness of savings. This would help check the constant rate of increase of consumption level as gross national income increases, particularly in the private sector. This would go a long way helping in the creation of wealth for reinvestment into the economy which would in turns increase economic growth and GNI
  2. The entrepreneurs should make proper use of information by the gross national income to enhance the proper management of the proportion of capital investment in relation to national income.
  3. Trade union leaders should use the estimated gross national income to obtain a proper distribution to wages earners, compared with proportion gained from unnamed income.
  4. Federal government should increase the public expenditure since it is expected to be more than half of the national output particularly on capital expenditures so as to create more job opportunities which the country presently lack.

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