ECONOMIC FREEDOM AND ECONOMIC MISERY IN NIGERIA: EVIDENCE FROM A FOURIER QUANTILE ARDL APPROACH

Abstract

The paper analyses the relationship between economic freedom and economic misery in Nigeria based on an annual time series of economic data as of 1980-2024. Fourier Quantile Autoregressive Distributed Lag FQARDL was used. Long-run quantile process estimates and short-run impact coefficients of the entire range of variables are statistically non-significant at the lower and upper quantiles of the misery distribution; but generally, are directionally consistent with a priori expectations. The impulse response analysis however reveals that a positive shock to economic freedom creates a negative and sustained cumulative reaction in economic misery. The impact is more intense at the lower quantile showing that economic misery becomes mitigated more efficiently in times of relative macroeconomic stability. These results imply that even though economic freedom can alleviate misery in Nigeria, it is limited by poor institutions, inconsistencies in policy, and structural inflexibility. The paper thus suggests that economic liberalisation, coupled with good institutional reforms, effective monetary policy, and more diversified foreign investment policy should be adopted to enable full transmissions of the welfare gains of economic freedom to the Nigerian households.