). Optimal Capital Accumulation and Balanced Growth Paths in an Exogenous Growth Setting for Nigeria (2017-2030): DGE Framework
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Date
2019-12
Authors
Odior, E.S.O.
Journal Title
Journal ISSN
Volume Title
Publisher
West African Financial and Economic Review (WAFER)
Abstract
This study uses the first key equations of the Ramsey–Cass–Koopmans and Solow neoclassical growth models to empirically project the likely optimal growth path for capital stock in Nigeria, if the models’ assumptions stay at expected. The study used a Dynamic General Equilibrium (DGE) framework to estimate the optimal capital accumulation and the balanced growth paths over a finite planning period 2017 to 2030. The results of dynamic macroeconomic model show that, the growth path of capital stock is characterised by constant return to scale, decreasing discount factor and increasing rate of savings. The results also show that, an increase in capital accumulation also leads to an increase in income, implying that capital is at optimal to predict a higher growth rate of income in the long-run. The Study concludes with an overwhelming evidence that rapid and sustained capital and income growth is critical to economic growth and the well-being of a nation. Therefore, it is important to devise ways of promoting capitalist economic development. The study recommends that technological and labour effectiveness should be the basis for capital accumulation and balanced growth for the Nigerian economy.
Description
Keywords
Capital Accumulation , Neoclassical Growth Models , Nigeria , DGE
Citation
Odior, E.S.O. (2019). Optimal Capital Accumulation and Balanced Growth Paths in an Exogenous Growth Setting for Nigeria (2017-2030): DGE Framework. West African Financial and Economic Review (WAFER), 19(2), 137 – 162.