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Exchange Rate and the Economic Growth in Nigeria

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  • Onuorah Anastasia Chichi
  • Osuji Chinaemerem Casmir

Abstract

Exchange rate policy has been identified as one of the endogenous factors that can affect the economic performance of a nation. Exchange rate plays a key role in international economic transactions because no nation can remain in isolation due to varying factor endowment. Movements in the exchange rate have ripple effects on other economic growth. The study used secondary data which was gotten from the World Bank data base respectively and were analysed. The study adopted the Ordinary Least Square (OLS) method of estimation for data covering the period between 2000 and 2010. The results from the econometric analyses show that there is a short-run relationship between exchange rate, inflation rate, interest rate and GDP. The result obtained from the unit root analysis indicates at least one time series variable property is stationary. The study concludes that in Nigeria, the factors that influence the level of growth rate are extent of Exchange rate and its variables. Based on the findings, from the granger causality investigation procedure at 5% critical value are EXR, INTR, INFR, IMPT and EXPT among other variables affects economic growth. The study recommends the need to be technological incline in all sectors of Nigerian’s economy, excess and over budgetary inflation and implementation should be cut to barest minimal level to avert the ideal of external borrowing which most consequently result in external debt and services. The Nigerian government should tow to the path of redirecting its investment profile by channelling it towards capital projects of the government.

Suggested Citation

  • Onuorah Anastasia Chichi & Osuji Chinaemerem Casmir, 2014. "Exchange Rate and the Economic Growth in Nigeria," International Journal of Management Sciences, Research Academy of Social Sciences, vol. 2(2), pages 78-87.
    • Handle: RePEc:rss:jnljms:v2i2p3
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    References listed on IDEAS

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    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
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    3. Aliyu, Shehu Usman Rano, 2009. "Impact of Oil Price Shock and Exchange Rate Volatility on Economic Growth in Nigeria: An Empirical Investigation," MPRA Paper 16319, University Library of Munich, Germany, revised 10 Jun 2009.
    4. Mohsen Bahmani‐Oskooee & Marina Kovyryalova, 2008. "Impact of Exchange Rate Uncertainty on Trade Flows: Evidence from Commodity Trade between the United States and the United Kingdom," The World Economy, Wiley Blackwell, vol. 31(8), pages 1097-1128, August.
    5. Clive, W.J. & Lin, Jin-Lung, 1995. "Causality in the Long Run," Econometric Theory, Cambridge University Press, vol. 11(3), pages 530-536, June.
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    Cited by:

    1. Nassirou, Aïchat, 2017. "Chocs macroéconomiques et intégration d’une union économique et monétaire: cas du Nigéria [Macroeconomic shocks and integration of an economic and monetary union: case of Nigeria]," MPRA Paper 79167, University Library of Munich, Germany.

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