scholarly journals Imperative of Exchange Rates Policy and Industrial Growth in Nigeria: A Time Series Analysis

2017 ◽  
Vol 10 (2) ◽  
pp. 187-198 ◽  
Author(s):  
Olatunji A. Shobande
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Money Supply ◽  
Exchange Rate Policy ◽  
Industrial Growth ◽  
Vector Error Correction ◽  
Tax Incentive ◽  
Long Run ◽  
Speed Up ◽  
The Impact

Abstract This paper looks at the impact of foreign exchange rate policies on industrial growth in Nigeria between 1981 and 2016. The study employed the Vector Error Correction Model (VECM) techniques, following the results of Johansen Cointegration techniques that shows the existence of long run relationship among the variables considered. While, VECM estimates showed that money supply (monetary policy) impacted positively effects, evidence on, TAX (fiscal policy) impacted negative on industrial growth. Besides, the Exchange rate and Inflation impacted negatively on industrial growth., suggesting that the issue of stability remained a challenge unresolved by the Apex bank. The emanating policy antidotes are that there is urgent need to use proactive monetary policy through money supply to speed up the rate of industrial growth on one hand, while providing tax incentive to various industrial good that can further have enhanced the contribution of the sector to industrial growth on the other. In all, the need to align the objective of exchange rate policy with broader macroeconomic goals is necessary for effective policy transmission mechanism to speed up the rate of industrial progress in the country.

scholarly journals Effect of Money Supply on the Stock Market

2017 ◽  
Vol 65 (2) ◽  
pp. 465-472 ◽  
Author(s):  
Vladimír Pícha
Keyword(s):  
Monetary Policy ◽  
Stock Market ◽  
Money Supply ◽  
Policy Framework ◽  
Vector Error Correction ◽  
Flow Of Funds ◽  
Portfolio Balance ◽  
Vector Error ◽  
Long Run ◽  
The Impact

This paper observes effect of money supply on the stock market through the portfolio balance channel as a transmission mechanism of monetary policy. National flow of funds accounts, specifically assets from US households’ portfolios, represent a key data source. Johansen’s cointegration methodology is employed in the empirical part of the paper to analyze both short term and long term relationships among researched variables. Estimates of vector error correction model help to reliably quantify intensity of the effect. Results show money supply excercises influence on valuation of S&P 500 index with 6 months lag. The impact is also distinguishable in the long run, whereas all observed asset classes can positively influence price of S&P 500. Findings are then contextualized in the concluding part of the paper using a monetary policy framework.

scholarly journals MONETARY POLICY AND INFLATION CONTROL: THE CASE OF NIGERIA

2021 ◽  
Vol 6 (2) ◽  
Author(s):  
Clement I. Ezeanyeji ◽  
Cyril Ogugua Obi ◽  
Chika Priscilla Imoagwu ◽  
Ugochukwu Frank Ejefobihi
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Money Supply ◽  
Series Data ◽  
Treasury Bill ◽  
Insignificant Effect ◽  
Long Run ◽  
Integration Test ◽  
Short Run ◽  
The Impact

Inflation is a major problem facing Nigeria as a country today. The Central Bank of Nigeria (CBN), however, has made efforts to fight it using different policy measures, of which monetary policy is one of them. Thus, this study focuses on the impact of monetary policy on inflation control in Nigeria. The study is based on time series data from 1980 to 2019. The Augmented Dickey Fuller test, Johansen’s co-integration test, the Error Correction model (ECM) estimation was employed in the analysis. The variables include – exchange rate, inflation rate, money supply (% GDP), Treasury bill rate and monetary policy rate. The research findings showed that monetary policy has no significant impact on inflation control in Nigeria both in the short – run and long – run. Money supply has negative and insignificant impact on inflation control in Nigeria both in the short – run and long – run. Again, exchange rate has negative and insignificant effect on inflation control in Nigeria both in the short – run and long – run. The Treasury bill rate has negative but significant effect on inflation control in Nigeria in the short – run, while in the long – run it has positive but insignificant effect on inflation control in Nigeria. The study, therefore, recommends that, Government should provide monetary policies that will preferred efficient provider of favourable environment in terms of the implementation of the appropriate monetary policy rate, exchange rate etc in order to attract both domestic and foreign investment which will create employment opportunities for the Nigerian populace and in turn lead to the expansion of the industries in the country. JEL: E42; E52; E31

scholarly journals Monetary Policy Spillovers Through Industrial Growth in Nigeria: A Time Series Analysis

2019 ◽  
Vol 33 (1) ◽  
pp. 94-110 ◽  
Author(s):  
Olatunji A. Shobande
Keyword(s):  
Time Series ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Series Data ◽  
Industrial Output ◽  
Industrial Growth ◽  
Long Run ◽  
Domestic Credit

Abstract The study examines the impact of switching from direct to indirect monetary policy on industrial growth in Nigeria, using the annual time series data sourced from the Central Bank of Nigeria’s (CBN) statistical bulletin between 1960 and 2015. The study adopts the Autoregressive Distributed Lag (ARDL) bound testing approach developed by Pesaran, Shin and Smith (2001) for estimating the relevant relationships. The result of the long-run estimates shows that domestic credit, interest rate and trade balance have positive impact on industrial output while money supply, inflation and exchange rate have negative impact on industrial growth. The result of the short-run dynamics shows that change in the previous (one and second lagged) periods of indirect monetary policy (interest rate, money supply, domestic credit and exchange rate) and industrial output were negatively related to change in industrial output. The error correction term indicates the speed of adjustment of equilibrium to their long-run position, which was found to be negative and significant. The study recommends that policy makers use both conventional and non-conventional monetary policies to speed up industrial output growth and enhance economic recovery by manipulating the macro-economic fundamentals.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

scholarly journals An Econometrics Analysis of the Impact Exchange Rate on Economic Growth of Nigeria

2021 ◽  
Vol 4 (3) ◽  
pp. 185-198
Author(s):  
Okosu Napoleon David
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Current Account ◽  
Series Data ◽  
Current Account Balance ◽  
National Account ◽  
Long Run ◽  
The Impact

The study interrogates the impact of exchange rate on the economic growth of Nigeria from 1981 to 2020 using quarterly time-series data from the Central Bank of Nigeria and the World Bank National Account. The dependent variable in the model was Real Gross Domestic Product (RGDP), and the independent variables were Exchange Rate (EXCHR), inflation (INFL), Interest Rate (INTR), Foreign Direct Investment (FDI), Broad Money Supply (M2) and Current Account Balance of Payment (CAB). The methodology employed was the Auto-Regressive Distributed Lag (ARDL) model which incorporates the Cointegration Bond test and Error-Correction Mechanism. The finding indicates that in the short run, EXCHR, CAB, M2 and FDI, had a positive impact on economic growth. The impact of EXCHR and CAB were significant on growth while that of M2 and FDI were insignificant to growth. However, INTR and INFL had a negative impact on economic growth with both variables being statistically significant. The bound test showed that there was a long-run relationship among the study variables, and the results from the long run reveal that the exchange rate has a positive and significant impact on economic growth. Inflation, Interest rate, FDI, Current Account Balance of Payment (CAB) and Broad Money Supply all have a positive and significant impact on economic growth. Based on the findings the study recommended that monetary authority should strictly monitor the operations of banks and other forex dealers with a view of ensuring unethical practices are adequately sanctioned to serve as a deterrent to others.

scholarly journals Investigating Exchange Rate Pass-through to Consumer Prices in Nigeria

2021 ◽  
Vol 21 (1) ◽  
pp. 105-121
Author(s):  
Ephraim Ugwu ◽  
Ditimi Amassoma ◽  
Christopher Ehinomen
Keyword(s):  
Exchange Rate ◽  
Research Work ◽  
Exchange Rate Policy ◽  
Long Run ◽  
Consumer Prices ◽  
Short Run ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
The Impact ◽  
Negative Shock

Abstract Research background: There have been several studies on the degree of exchange rate pass-through (ERPT) to consumer prices, as well as macroeconomic environment with yet no clear direction. Purpose: This research work investigates exchange rate pass-through effects into consumer prices in Nigeria from 1960 to 2018. Research methodology: The methodology employed by the study for estimation is the Johansen cointegration and Vector Error Correction Model (VECM) procedures. Results: The empirical results indicate an incomplete pass-through of exchange rate into consumer prices in Nigeria. The pass-through is found to be 1.6 for the model under consideration. The impulse response function results indicate that the response of the consumer prices to the exchange rate shock decreases immediately to a negative shock in the short run, and continues along the horizon to a positive shock in the long run. Also, the response of consumer prices to interest rate shock decreases immediately and continues to fluctuate to a negative shock in both the short run long run horizon. Novelty: The results support the view that exchange rate policy should be complimented with coordinated macroeconomic policy approaches in order to control inflationary level in the economy. The study therefore recommends that the Federal Government should adopt a tightening of the monetary policy as it will help reduce the impact of exchange rate depreciation on consumer prices.

Real Effective Exchange Rate, Broad Money Supply, and Trade Balance in Vietnam: An Empirical Analysis from Bounds Test to a Cointegration Approach

2020 ◽  
Author(s):  
Kieu Oanh Dao ◽  
V.C. Nguyen ◽  
Si Tri Nhan Dinh
Keyword(s):  
Exchange Rate ◽  
Money Supply ◽  
Trade Balance ◽  
Negative Impact ◽  
Positive Impact ◽  
Real Effective Exchange Rate ◽  
Long Run ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

This paper aims to investigate the impact of the real effective exchange rate and broad money supply on the trade balance in Vietnam using quarterly data from the first quarter of 2000 to the fourth quarter of 2018. Using the ARDL-ECM approach to investigate this effect, a cointegration relationship exists between real effective exchange rate, broad money supply and trade balance. Results demonstrate that real effective exchange rate has a short-term negative impact on trade balance. Additionally, broad money supply has a positive impact on trade balance in the short run and long run with a very weak effect. Surprisingly, it was found that real foreign income and local income have no impact on trade balance.

IMPACT OF MONETARY POLICY TARGETS ON CAPITAL MARKET DEVELOPMENT IN NIGERIA

2021 ◽  
Vol 8 (1) ◽  
pp. 85-95
Author(s):  
Abdulkarim Musa ◽  
◽  
Uwaleke Uche ◽  
Nwala Nneka ◽  
◽  
...  
Keyword(s):  
Monetary Policy ◽  
Money Supply ◽  
Capital Market ◽  
Time Series Data ◽  
Market Development ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

This study empirically examines the impact of monetary policy targetson capital market development in Nigeria from 1986-2018. Time series data and econometric tools were used to test for the stationarity and causality effect. The Auto-Regressive Distributed Lag Model (ARDL) and Error Correction Model (ECM) techniques were used to examine the short-run and long-run impact and relationship between Monetary Policy and Capital Market Development in Nigeria. The study revealed that both in the long run and short run Exchange Rate (EXCHR), Inflation Rate (INFR), and Interest Rate in Nigeria (INTR)were negatively related to Capital Market Development (CAMKTD) in Nigeria and they were statistically insignificant in explaining changes in Capital Market Development (CAMKTD) in Nigeria. On the other hand, inthe long run, Money Supply was positively related to Capital Market Development (CAMKTD) in Nigeria and was statistically significant at a 5% level significant while Money Supply (M2) was positively related to Capital Market Development (CAMKTD) in Nigeria both in the long run and short-run and was statistically significant at 5% level of significance. Therefore, the study recommends that government should improve the efficiency and effectiveness of the money supply in Nigeria since it was statistically significant in determining the improvement of Capital Market Development (CAMKTD) in Nigeria.

scholarly journals Exchange Rate Pass-Through to Import Prices, Inflation and Monetary Policy in Nigeria

2015 ◽  
Vol 2 (1) ◽  
pp. 60 ◽  
Author(s):  
M. O. Fatai ◽  
T. O. Akinbobola
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Impulse Response Function ◽  
Exchange Rate Policy ◽  
Annual Data ◽  
Import Prices ◽  
The World ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
The Impact

The study investigates the impact of Exchange Rate Pass-through (ERPT) to import prices, Inflation, and monetary policy in Nigeria. Secondary data were used. The data covered the period of 1986-2012. Annual data on Nominal Effective Exchange Rate Index (NEER), Import Prices (IMP), Interest Rate (ITR), Money Supply (MS) and Inflation (INF) were sourced from the publication of the Central Bank of Nigeria (CBN) and Oil Price Index (OPI) were sourced from the World Development Indicators (WDI) published by the World Bank. The study applied Six-Variable VAR Model to estimate the Impulse Response Function (IRFs) and Variance Decomposition (VDCs). Based on SVAR analysis the study found that ERPT in Nigeria during the period under review is moderate, significant and persistent in the case of import prices and low and short lived in the case of inflation. The fact is that, ERPT was found to be incomplete and has useful implication to policymakers, especially in the design and implementation of exchange rate and monetary policy. Thus policy makers should take into account the incomplete response of import prices when they decide to devalue the currency so as to improve trade balance irrespective of several other factors which might determine the effectiveness of exchange rate policy (such as supply factors, elasticity of foreign and domestic demand, availability of substitutes etc ). To achieve this, the increased role of CBN will definitely require a carefully developed monetary policy and a strengthening of its institutional capacity. 

scholarly journals THE RELATIONSHIP BETWEEN MONETARY POLICY AND PRIVATE SECTOR CREDIT IN SADC COUNTRIES

2021 ◽  
Vol 9 (1) ◽  
pp. 46-54
Author(s):  
Vikela Liso Sithole ◽  
◽  
Tembeka Ndlwana ◽  
Kin Sibanda ◽  
◽  
...  
Keyword(s):  
Monetary Policy ◽  
Gross Domestic Product ◽  
Private Sector ◽  
Money Supply ◽  
Sustainable Growth ◽  
Domestic Product ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact ◽  
The Relationship

This paper empirically examined the relationship between monetary policy and private sector credit in the Southern African Development Community (SADC) group of countries using a panel autoregressive distributed lag (ARDL) co-integration technique for the period from 2009 to 2018. The Hausman test result indicated that the null hypothesis of long-run homogeneity cannot be rejected and hence we accept the pooled mean group estimators (PMGE) as a consistent and efficient estimator. The PMGE results showed that credit to the private sector and gross domestic product have a positive and statistically significant long-run impact on money supply. The impact of credit to the private sector on money supply is shown by the results to be statistically significant and positive both in the short and long run. The impact of gross domestic product on money supply was found to be statistically significant positive in the long run while positive but insignificant in the short run. The study recommends policy attention that is directed towards the appetite for accelerated growth, investment, and employment in the SADC region but more importantly with more regard to the establishment of sustained macroeconomic stability as a precondition to sustainable growth and for the creation of monetary union in the region.

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