Affiliation:
1. National Open University of Nigeria, Abuja, Nigeria
2. Federal University, Oye-Ekiti, Nigeria
Abstract
This study evaluates macroeconomic variables' effect on economic development in Mauritius from 1981 to 2019. The study employs the vector error correction (VECM) model for estimation. The long-run estimated results indicates a positive feedback between the variables, export, LOG(EXPT), external debt, LOG(DEBT), foreign direct investment (FDI), interest rate (INTR), the per capita GDP growth and a negative feedback between the per capita growth of the economy and the gross fixed capital formation LOG(GFCF(-1)), import (LOG(IMP)), and exchange rate (EXCH). The impulse response function (IRF) result indicates that the response of PERCAP to itself increases instantly and significantly and decreases in the short-run but continues with a positive sign along the horizons in the long-run. The response of GFCF to per capita shock increases immediately and continues to a positive shock in both short-run and the long-run horizon. The monetary policy variable,s INTR and EXCH, respond to per capita increase continues with the positive signs in both the short and long-run.
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