SHORT AND LONG RUN ROLE OF EXCHNAGE RATE MOVEMENT ON ECONOMIC GROWTH IN NIGERIA
Keywords:
Exchange rate, Economic growth, Nigeria
Abstract
The study investigated the effect of exchange rate movement on economic growth in Nigeria for the period of 32 years (1986-2017). The study specifically examined the effect of exchange rate, import, export and government expenditure on economic growth proxied as real gross domestic product in Nigeria. Autoregressive Distributed Lag model (ARDL) Bound test was employed. The study found evidence of longrun relationship between exchange rate movement and economic growth in Nigeria. The study further revealed that exchange rate and government expenditure have significant positive effect on economic growth; import has insignificant negative effect on economic growth; export has insignificant positive effect on economic growth. The study concluded that exchange rate movement has significant effect on economic growth in Nigeria. The study therefore suggested that the government should introduce import reducing policy that will stabilize the import-export balances such that local goods can be well embraced.
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References
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Ajayi, O. E., Akinbobola, T. O., & Samuel-Okposin, O. O. (2016).Interactive effects of exchange rate and foreign capital inflows on economic growth in Nigeria.3rd International Conference on African Development Issue (CU-ICAD, 2016), 139-145.
Akila, W. (2004).Exchange rate systems, Lecture 5.
Amassoma, D., &Odeniyi, B. D. (2016).The nexus between exchange rate variation and economic growth in Nigeria.Singaporean Journal of Business Economics, and Management Studies, 12 (4), 8-28.
Azeez, B. A., Kolopo, F. T., & Ajayi, L. B. (2012).Effect of exchange rate volatility on macroeconomic performance in Nigeria.Interdisciplinary Journal of contemporary Research in Business, 4(1), 149–155.
Balassa, B. (1963): The purchasing power parity doctrine: A reappraisal. Journal of Political Economy,72, 584–96.
Elias, I. A., Agu, R. E., &Eze, L. O. (2018).Impact of international trade on economic growth of Nigeria.European Journal of Business and Management, 10(18), 22-30.
Eme, O. Akpan, E. O., &Atan, J. A. (2012).Effects of exchange rate movements on economic growth in Nigeria.CBN Journal of Applied Statistics, 2(2), 1-14.
Fourie, T. J., Pretorious T., Harvey, R., Van-Niekerk, H., &Phiri, A. (2017).Nonlinear relationship between exchange rate volatility and economic growth: A South African Perspective. Department of Economics, Finance and Business Studies, CTI Potchefstroom Campus, North West, South Africa, 1-29.
Gbatu, A. P., Wang, Z., Wesseh, P. K., &Tutdel, I. Y. R. (2017).Causal effects and dynamic relationship between exchange rate volatility and economic development in Liberia.International Journal of Economics and Financial Issues, 7(4), 119-131.
Guellil, Z., Marouf, F. Z., &Benbouziane, M. (2017). Exchange rate regimes and economic growth in developing countries: An empirical study using panel data from 1980 to 2013. Management International Conference, 5, 379-391.
Hajilee, M., & Al-Nasser, O. M. (2017). Financial depth and exchange rate volatility: A Multicountry Analysis. The American Economist, 62(1), 19 –30.
Humyra, J. B. (2014). Impact of financial development on exchange rate volatility and long-run growth relationship of Bangladesh.International Journal of Economics and Financial Issues, 4(2), 258-263.
Inam, U. S., &Umobong, E. C. (2015).An empirical analysis of the relationship between exchange rate movements and economic growth in Nigeria.European Journal of Business and Management, 7(30), 191-199.
Ismaila, M. (2016).Exchange rate depreciation and Nigeria economic performance after structural adjustment programmes (SAPs).NG-Journal of Social Development, 5 (2), 122-132.
Iyeli, I. I., Nenbee, S. G., &Opue, J. A. (2011).Exchange rate volatility and its effects on tradeable goods in Nigeria annals of humanities and development studies. Universal Academic Services, Beijing, China, 3(2), 11-28.
Iyeli, I. I. &Utting, C. (2017).Exchange rate volatility and economic growth in Nigeria.International Journal of Economics, Commerce and Management, 5(7), 583-595.
Jelilov, G., &Musa, M. (2016).The impact of government expenditure on economic growth in Nigeria.Sacha Journal of Policy and Strategic Studies, 5(1), 15 – 23.
Jhingan, M. L. (2010). Money banking, international trade and public finance. Delhi: Vrinda Publications (P) Limited.
Mahmood, I., Ehsanullah, M., & Ahmed, H. (2011).Exchange rate volatility & macroeconomic variables in Pakistan.Business Management Dynamics, 1(2), 11-22.
Mbanasor, C. O., &Obioma, J. (2017). The Effect of Fluctuations of Exchange Rates on Nigeria’s Balance of Payment. IIARD – International Institute of Academic Research and Development, 3(2), 53-75.
Mordi, M. C. (2006). Challenges of exchange rate volatility in economic management of Nigeria, in the dynamic of exchange rate in Nigeria.CBN Bullion, 30 (3), 17-25.
Nwosu, N. C. I. (2016). Impact of exchange rate volatility on economic growth in Nigeria. A P.hD. Dissertation Submitted to the Department of Banking and Finance, Faculty of Business Administration, University of Nigeria.
Obandan, M. I. (2006). Overview of Nigeria's exchange rate policy and management. Lagos: C.B.N Publications.
Odili, O. (2015). Real exchange rate, economic growth and international trade in an emerging market economy: Evidence from Nigeria. International Journal of Academic Research in Business and Social Sciences, 5(7),179-201.
Okorontah, C. F., &Odoemena, I. U. (2016).Effects of exchange rate fluctuations on economic growth of Nigeria.International Journal of Innovative Finance and Economics Research 4(2):1-7.
Oladipupo, A. O., &Ogheneov, O. F. (2011).Impact of exchange rate on balance of payment in Nigeria.African Research Reviews, 5(4), 73-88.
Oloyede, O., &Essi, D. I. (2017).The effect of exchange rate on imports and exports in Nigeria from January 1996 to June 2015.IIARD International Journal of Economics and Business Management, 3(2), 66-77.
Onyango, D. W. (2014). The Impact of real exchange rate volatility on economic growth in Kenya. A Research Project Submitted to the School of Economics, University of Nairobi, in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Arts in Economics, 12-70.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001).Bounds testing approaches to the analysis of level relationships.Journal of Applied Econometrics, 16(3), 289-326.
Razazadehkarsalari, A., Haghir F., &Behrooznia, A. (2011).The effect of exchange rate fluctuations on real GDP in Iran.American Journal of Scientific Research Issue, 26, 6-18.
Samuelson, P. A. (1963). Theoretical notes on trade problems. Review of Economics and Statistics, 46(5), 145–154.
Stock, J. H., & Watson, M. W. (2003).Introduction to Econometrics. New York: Prentice Hall.
Takaendesa, P. (2006). The behaviour and fundamental determinants of real exchange rate in South Africa. A Masters Thesis Submitted to Rhodes University, South Africa.
Usman, O. A., &Adegbite, T. A. (2013). Effect of Exchange Rate on Nigeria Economy (1991-2010). International Journal of Academic Research in Economics and Management Sciences, 2(6),172-184.
Zahoor, H. J., & Muhammad, F. (2009). Economic growth and exchange rate volatility in case of Pakistan. Pak. j. life soc. sci. 7(2), 112-118.
Ajayi, O. E., Akinbobola, T. O., & Samuel-Okposin, O. O. (2016).Interactive effects of exchange rate and foreign capital inflows on economic growth in Nigeria.3rd International Conference on African Development Issue (CU-ICAD, 2016), 139-145.
Akila, W. (2004).Exchange rate systems, Lecture 5.
Amassoma, D., &Odeniyi, B. D. (2016).The nexus between exchange rate variation and economic growth in Nigeria.Singaporean Journal of Business Economics, and Management Studies, 12 (4), 8-28.
Azeez, B. A., Kolopo, F. T., & Ajayi, L. B. (2012).Effect of exchange rate volatility on macroeconomic performance in Nigeria.Interdisciplinary Journal of contemporary Research in Business, 4(1), 149–155.
Balassa, B. (1963): The purchasing power parity doctrine: A reappraisal. Journal of Political Economy,72, 584–96.
Elias, I. A., Agu, R. E., &Eze, L. O. (2018).Impact of international trade on economic growth of Nigeria.European Journal of Business and Management, 10(18), 22-30.
Eme, O. Akpan, E. O., &Atan, J. A. (2012).Effects of exchange rate movements on economic growth in Nigeria.CBN Journal of Applied Statistics, 2(2), 1-14.
Fourie, T. J., Pretorious T., Harvey, R., Van-Niekerk, H., &Phiri, A. (2017).Nonlinear relationship between exchange rate volatility and economic growth: A South African Perspective. Department of Economics, Finance and Business Studies, CTI Potchefstroom Campus, North West, South Africa, 1-29.
Gbatu, A. P., Wang, Z., Wesseh, P. K., &Tutdel, I. Y. R. (2017).Causal effects and dynamic relationship between exchange rate volatility and economic development in Liberia.International Journal of Economics and Financial Issues, 7(4), 119-131.
Guellil, Z., Marouf, F. Z., &Benbouziane, M. (2017). Exchange rate regimes and economic growth in developing countries: An empirical study using panel data from 1980 to 2013. Management International Conference, 5, 379-391.
Hajilee, M., & Al-Nasser, O. M. (2017). Financial depth and exchange rate volatility: A Multicountry Analysis. The American Economist, 62(1), 19 –30.
Humyra, J. B. (2014). Impact of financial development on exchange rate volatility and long-run growth relationship of Bangladesh.International Journal of Economics and Financial Issues, 4(2), 258-263.
Inam, U. S., &Umobong, E. C. (2015).An empirical analysis of the relationship between exchange rate movements and economic growth in Nigeria.European Journal of Business and Management, 7(30), 191-199.
Ismaila, M. (2016).Exchange rate depreciation and Nigeria economic performance after structural adjustment programmes (SAPs).NG-Journal of Social Development, 5 (2), 122-132.
Iyeli, I. I., Nenbee, S. G., &Opue, J. A. (2011).Exchange rate volatility and its effects on tradeable goods in Nigeria annals of humanities and development studies. Universal Academic Services, Beijing, China, 3(2), 11-28.
Iyeli, I. I. &Utting, C. (2017).Exchange rate volatility and economic growth in Nigeria.International Journal of Economics, Commerce and Management, 5(7), 583-595.
Jelilov, G., &Musa, M. (2016).The impact of government expenditure on economic growth in Nigeria.Sacha Journal of Policy and Strategic Studies, 5(1), 15 – 23.
Jhingan, M. L. (2010). Money banking, international trade and public finance. Delhi: Vrinda Publications (P) Limited.
Mahmood, I., Ehsanullah, M., & Ahmed, H. (2011).Exchange rate volatility & macroeconomic variables in Pakistan.Business Management Dynamics, 1(2), 11-22.
Mbanasor, C. O., &Obioma, J. (2017). The Effect of Fluctuations of Exchange Rates on Nigeria’s Balance of Payment. IIARD – International Institute of Academic Research and Development, 3(2), 53-75.
Mordi, M. C. (2006). Challenges of exchange rate volatility in economic management of Nigeria, in the dynamic of exchange rate in Nigeria.CBN Bullion, 30 (3), 17-25.
Nwosu, N. C. I. (2016). Impact of exchange rate volatility on economic growth in Nigeria. A P.hD. Dissertation Submitted to the Department of Banking and Finance, Faculty of Business Administration, University of Nigeria.
Obandan, M. I. (2006). Overview of Nigeria's exchange rate policy and management. Lagos: C.B.N Publications.
Odili, O. (2015). Real exchange rate, economic growth and international trade in an emerging market economy: Evidence from Nigeria. International Journal of Academic Research in Business and Social Sciences, 5(7),179-201.
Okorontah, C. F., &Odoemena, I. U. (2016).Effects of exchange rate fluctuations on economic growth of Nigeria.International Journal of Innovative Finance and Economics Research 4(2):1-7.
Oladipupo, A. O., &Ogheneov, O. F. (2011).Impact of exchange rate on balance of payment in Nigeria.African Research Reviews, 5(4), 73-88.
Oloyede, O., &Essi, D. I. (2017).The effect of exchange rate on imports and exports in Nigeria from January 1996 to June 2015.IIARD International Journal of Economics and Business Management, 3(2), 66-77.
Onyango, D. W. (2014). The Impact of real exchange rate volatility on economic growth in Kenya. A Research Project Submitted to the School of Economics, University of Nairobi, in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Arts in Economics, 12-70.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001).Bounds testing approaches to the analysis of level relationships.Journal of Applied Econometrics, 16(3), 289-326.
Razazadehkarsalari, A., Haghir F., &Behrooznia, A. (2011).The effect of exchange rate fluctuations on real GDP in Iran.American Journal of Scientific Research Issue, 26, 6-18.
Samuelson, P. A. (1963). Theoretical notes on trade problems. Review of Economics and Statistics, 46(5), 145–154.
Stock, J. H., & Watson, M. W. (2003).Introduction to Econometrics. New York: Prentice Hall.
Takaendesa, P. (2006). The behaviour and fundamental determinants of real exchange rate in South Africa. A Masters Thesis Submitted to Rhodes University, South Africa.
Usman, O. A., &Adegbite, T. A. (2013). Effect of Exchange Rate on Nigeria Economy (1991-2010). International Journal of Academic Research in Economics and Management Sciences, 2(6),172-184.
Zahoor, H. J., & Muhammad, F. (2009). Economic growth and exchange rate volatility in case of Pakistan. Pak. j. life soc. sci. 7(2), 112-118.
Published
2019-04-30
How to Cite
Emenuga, P. (2019). SHORT AND LONG RUN ROLE OF EXCHNAGE RATE MOVEMENT ON ECONOMIC GROWTH IN NIGERIA. GPH-International Journal of Business Management, 2(04), 01-21. Retrieved from https://gphjournal.org/index.php/bm/article/view/202
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