A STUDY ON REGRESSION ANALYSIS ON NATIONAL INCOME
- Project Research
- 1-5 Chapters
- Quantitative
- Regression
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 3000
BACKGROUND TO THE STUDY
The sum of the money worth of all the commodities and services produced in a country during a specific time period, generally a year, is referred to as national income. At this point, the topic of how an economy expands may spring to mind. When a country's economy produces more products and services, it grows. It is not expanding if it does not rise annually, and even if it does, the pace of growth may vary from year to year. As a result, determining the state of the economy may be impossible (Babatunde, 2011).
In any event, an economy requires an indicator to track its progress; this indicator is the monetary total of all the goods and services produced in the economy during a given period of time, generally a year.
To calculate a country's national income, for example, we take a list of the commodities and services produced throughout the year, assign values to them, and sum them up. We would be able to compare Nigeria's activity year after year if we can accomplish this year after year. Then we'll be able to tell if Nigeria's economy is expanding, falling, or stationary. It is increasing if the national income grows year after year, dropping if the national income decreases year after year, and stationary if the national income does not change for years (Chika, 2019).
At present prices, a metric called Gross Domestic Product (GDP) is used to calculate national income. As a result, it's critical to emphasize the function that pricing might play in determining national income. The cost of products and services fluctuates throughout time. Any attempts at estimations may be harmed as a result of these modifications. As a result, the influence of price changes must be eliminated in order to gain a sense of the true physical change in National Income from year to year.
National income should be calculated in real terms to account for price fluctuations. When the economy faces inflation, for example, prices rise but the quantity of products and services remains unchanged. Let's imagine that in 2000, the total units of goods and services sold in Nigeria were 50,000, and in 2001, they were 50,000. Assume that the average unit price in 2000 was N10.00, and that the price in 2001 was N15,000 (Babatunde, 2011).
Nigeria's income in 2000 was 50,000 units X N10.00 = N5000,000, using GDP as an indicator. In 2001, Nigeria's gross domestic product (GDP) was 50,000 units x N15.00 = N750,000.
If a layperson were to compare the two statistics as the end outputs of overall estimates for 2000 and 2001, he may conclude that 2001's national income was larger than 2000's. This is so financially, but the revenue for both years is the same. The change in value was due to a spike in p rice in 2001, despite the fact that the quantity of commodities and services in both years were the same.
When a country experiences deflation or depression, the same thing might happen. As a result, when comparing national income across time using gross domestic product as an indicator, the impacts of price changes must be taken into account. As a result, changes in the economy may be accurately predicted.
STATEMENT OF PROBLEM/MOTIVATION
As a result of Nigeria's dismal economic situation, this study is really interested in gathering pertinent information to see whether a feasible economic solution may be discovered. Nigeria is classified as a third-world country based on its annual gross domestic product (Babatunde, 2011). It is a basic logic of our lives that if a country's income is high and it has a large population, the residents of that country will have a high level of enjoyment, but if the country's income is low, the citizens will have a low level of happiness. It is on this basis that I believe it is vital to examine Nigeria's national income and make required recommendations for improving the economy in order to benefit the citizens.
AIMS AND OBJECTIVES
In view of Nigeria’s economic predicament, the project is aimed at investigating the relationship existing between disposable income, savings and government final expenditure for the purpose of suggesting solutions to our economic problems.
After the regression analysis had been carried out, it will supply solution to the following questions:
1. Is any linear relationship between the variables listed?
2. How reliable is our regression coefficient?
3. Can we predict the future value of dependent variable?
4. How reliable will be our estimate?
SCOPE OF THE STUDY
The study is centre on “National Income, Savings and Government Final Consumption Expenditure Covering the period of six years 1999 – 2005.
The raw data used are collected as primary data by federal office of statistics” publication and Federal Ministry of Finance Publication. The data are collected as primary data by federal office of statistics and used as secondary data in this project which centered on national Accounts. Some of these National Accounts Aggregates Include Gross Domestic Product (GDP) final consumption expenditure, exports and imports.
National Accounts data presents the record of economic transaction of the economic in a systematic manner and show the relationship between the various components of the economy. Economic transaction cover all the activities of an entity (Household, government, firm, financial institution) that are of economic nature (production, consumption distribution, savings and foreign exchange transactions. These economic transactions of all the entiti8tes and combined together ad presented inform of account.
Data collected for analysis in this study center on:-
1. Appropriation of disposable income as dependent variable.
2. Savings as one of the independent variable
3. Government final consumption expenditure as another independent variable.
SIGNIFICANCE OF THE STUDY
The study will help to know the status of Nigeria economy. The knowledge of the status will help to make necessary recommendation in order to revitalize the poor economic condition of the country for the better future.
The study will also create avenue for future research.
DEFINITION OF CONCEPTS
Gross Domestic Product (GDP): This is the sum of the money value of all locally produced goods and services. It does not include international transaction. GDP does not make allowance for depreciation of capital.
Gross National Product (GNP): This is the total money value of current market prices of all final goods and services produced by the nationals during a specific period. It includes net income from abroad in respect of the country’s nationals without any consideration for depreciation of capital.
National Domestic Product (NDP): This is the total value of all goods and services produced in a country in a period of time. It exclude the value of the net earnings and incomes from abroad. An allowance being made for depreciation of capital.
Net National Product (NNP): This is the monetary value of all goods and services produced within the country during a specific period. It includes net incomes and earning from abroad and provision being made for the replacement of depreciation of capital.
Disposable Income (DPI): This is the amount of money per year that private sector are free to spend when depreciation of capital, all taxes, all net profits made by firms but not paid out as divided are added to the disposable and transfer payment subtracted. We arrive at gross national product.
Net Economic Welfare (NEW): This examines those factors not considered when calculating the Gross National Product (GNP). Such factors include social cost 9pollution) and leisure time the net economic welfare tend to remove the product (GNP). A nation might have a very high GNP at a very great social cost as pollution, rising crime etc.
Per Capita Income (PCI): This is the gross domestic product divided by the population of the country. Per capita income can be calculated once the population and gross domestic product are known. So that P.C.I = GDP
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