Asymmetric and time-frequency effects of insecurity and macroeconomic instability on economic growth in Nigeria

Nigeria’s persistent growth underperformance depicts a complex interplay between insecurity and macroeconomic instability, yet existing studies treat this relationship as linear and time-invariant. This study addresses these gaps by examining the nonlinear and time-frequency effects of insecurity and macroeconomic instability on economic growth in Nigeria from 1980 to 2020. Methodologically, it combines the Nonlinear Autoregressive Distributed Lag (NARDL) framework, which distinguishes the growth effects of worsening and improving security conditions alongside asymmetric changes in inflation, exchange rates, and capital formation, with wavelet coherence analysis to trace time-varying and frequency-dependent relationships. The findings reveal a stable long-run cointegrating relationship in which rising insecurity reduces economic growth by approximately 2.93%, a loss not symmetrically offset by security improvements, consistent with investment irreversibility and hysteresis. Inflationary shocks constrain growth through cost-push and demand-compression channels, while capital formation contractions are significantly more harmful than expansions are beneficial. Exchange rate movements remain statistically insignificant, reflecting structural transmission inefficiencies. Wavelet analysis further shows that the insecurity–growth nexus is episodic, intensifying during periods of escalating insurgency and becoming multidirectional at medium-run frequencies. These findings provide the first systematic evidence of asymmetric and time-frequency effects in the Nigerian insecurity–growth nexus, offering a more nuanced empirical foundation for policy design. The results imply that effective policy must be preventive rather than reactive, sequenced to stabilise high-conflict zones before macroeconomic reforms can generate sustainable growth dividends.