Exchange Rate Fluctuation and the Nigeria Economic Growth Cover Image

Exchange Rate Fluctuation and the Nigeria Economic Growth
Exchange Rate Fluctuation and the Nigeria Economic Growth

Author(s): Lawal Adedoyin Isola, Atunde Ifeoluwa Oluwafunke, Ahmed Victor, Abiola John Asaleye
Subject(s): Economy
Published by: Editura Universitară Danubius
Keywords: Exchange rate; economic growth; Nigeria; ARDL

Summary/Abstract: The aim of this study is to investigate the impact of exchange rate fluctuation on economic growthin Nigeria within the context of four profound theories: purchasing power parity; monetary model of exchangerates; the portfolio balance approach; and the optimal currency area theory. Data was collected from the CBNstatistical bulletin in Nigeria from 2003– 2013and the Autoregressive Distributed Lag (ARDL) model wasemployed to estimate the model. In the model, real GDP (RGDP) was used as the proxy for economic growthwhile Inflation rate (IF), Exchange rate (EXC), Interest rate (INT) and Money Supply(M2) as proxies for othermacroeconomic variables. The empirical results show that exchange rate fluctuation has no effect on economicgrowth in the long run though a short run relationship exist between the two. Based on these findings, this paperrecommends that the Central bank for policy purposes should ensure that stern foreign exchange control policiesare put in place in order to help in appropriate determination of the value of the exchange rate. This will in thelong run help to strengthen the value of the Naira.

  • Issue Year: 35/2016
  • Issue No: 02
  • Page Range: 127-142
  • Page Count: 16
  • Language: English