Effects of Some Macroeconomic Variables on Economic Growth

Abstract

The economy is significantly impacted by macroeconomic variables. Both enterprises and nations are equally impacted. Economists and policymakers frequently research the interrelationships among various macroeconomic variables. This study’s main goal is to evaluate how various macroeconomic factors affect economic growth. GDP has been used in place of the economy’s development as a dependent variable in this study, whereas interest rates, inflation (INF), and exchange rates have been used as independent variables. Furthermore, all econometric analyses in this work were conducted using time series secondary data spanning from 2002 to 2020. On the other hand, we used multiple linear regression to examine the overall impact of macroeconomic factors on the expansion of the economy, the Durbin-Watson (DW) statistic technique to confirm the autocorrelation of variables, and the ADF (Augmented Dickey-Fuller) test to investigate the unit root (stationary property) of data. The results show that there is no long-term association between GDP and the interest rate or exchange rate, but there is a short-term relationship between GDP and the rate of inflation. Ultimately, nevertheless, there is a strong and inverse relationship between GDP and interest and exchange rates, as well as a strong and positive association between GDP and inflation.