Author
Listed:
- Jabiru Abdulhamid
- Umar Shuaibu Aliyu
- Sanusi Rabiu
- Saifullahi Sani Ibrahim
- Behiye Cavusoglu
Abstract
While shocks driven by exchange rate volatility and its impact on growth have been investigated in the extant literature, the recent exchange depreciation of major currencies has reignited interest among scholars. This study scrutinizes a novel Bootstrap Autoregressive Distributed Lag (BARDL) model for the effect of exchange rate shocks on the growth of the Nigerian economy. The results reveal several key findings. First, the finding from the bootstrap bound test revealed the presence of a cointegration relation between exchange rate and economic growth, indicating that exchange rate is a key indicator of inducing growth performance in Nigeria in the long-run horizon. Second, the results also show an inverted U-shaped effect of exchange rate on growth performance in the short-run horizon. This finding indicates that the coexistent positive effect of exchange rate shock on growth metamorphosed into a negative effect within a second lag. Third, while exchange rate depreciation retards economic growth in the short-run, the pattern demonstrates a strong potential for currency devaluation on external trade competitiveness of Nigeria. Fourth, the finding from the nonlinear model reveals the existence of strong asymmetries in exchange rate and economic growth nexus which validate the J-curve effect in Nigeria. The shocks driven from trade, particularly the import shocks are exacerbating the instability in the exchange market. Thus, controlling the asymmetric effects of exchange rate and import shocks is key to the sustainable growth of the Nigerian economy.
Suggested Citation
Jabiru Abdulhamid & Umar Shuaibu Aliyu & Sanusi Rabiu & Saifullahi Sani Ibrahim & Behiye Cavusoglu, 2024.
"A Novel Bootstrap Approach for the Effect of Exchange Rate Shocks on Growth Performance in Nigeria,"
SAGE Open, , vol. 14(4), pages 21582440241, December.
Handle:
RePEc:sae:sagope:v:14:y:2024:i:4:p:21582440241304248
DOI: 10.1177/21582440241304248
Download full text from publisher
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:sagope:v:14:y:2024:i:4:p:21582440241304248. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.