Econometric Assessment of the Impact of Exchange Rate Depreciation on Inflation in Nigeria (1981-2017)

The present reality of the Nigerian economy is the fact that inflation has remained unabated in spite of all exchange rate measures that have been adopted by the monetary authority. This calls for investigation into the extent to which exchange rate impact on inflation in Nigeria. The research paper examined the impact of exchange rate depreciation on inflation in Nigeria for the period 1981–2017, using Auto Regressive Distributed Lag (ARDL) Bounds Test Cointegration Procedure. The research shows that inflation rate in Nigeria is highly susceptible to lagged inflation rate, exchange rate, lagged exchange rate, lagged broad money, and lagged gross domestic product at 5% level of significance. A long run relationship was also found to exist between inflation rate, gross domestic product and general government expenditure, indicating that the model has a self-adjusting mechanism for correcting any deviation of the variables from equilibrium. Therefore, this study concludes that exchange rate is an important tool to manage inflation in the country; thus, this paper recommends that policies that have direct influence on inflation as well as exchange rate policies that would checkmate inflation movement in the country, should be used by the Central Bank of Nigeria. Also, monetary growth and import management policies should be put in place to encourage domestic production of export commodities, which are currently short-supplied. In addition, policy makers should not rely on this instrument totally to control inflation, but should use it as a complement to other macro-economic policies.

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An Econometric Assessment of the Impact of Exchange Rate Depreciation on Inflation in Nigeria (1981-2017)

10.20944/preprints201901.0289.v1 ◽

2019 ◽

Cited By ~ 1

Author(s):

Kenneth Apeh ◽

Abubakar Muhammad Auwal ◽

Nweze Nwaze Obinna

Keyword(s):

Exchange Rate ◽

Gross Domestic Product ◽

Inflation Rate ◽

Government Expenditure ◽

Domestic Product ◽

Economic Policies ◽

Distributed Lag ◽

Long Run ◽

The Impact ◽

Exchange Rate Depreciation

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Impact of Exchange Rate Management on the Nigerian Economic Growth: Empirical Validation

American International Journal of Economics and Finance Research ◽

10.46545/aijefr.v1i2.68 ◽

2019 ◽

Vol 1 (2) ◽

pp. 28-35

Author(s):

Friday Osaru Ovenseri Ogbomo ◽

Precious Imuwahen Ajoonu

Keyword(s):

Economic Growth ◽

Exchange Rate ◽

Inflation Rate ◽

Government Expenditure ◽

Least Square ◽

Ordinary Least Square ◽

Exchange Rate Management ◽

Long Run ◽

Short Run ◽

The Impact

This paper examined the impact of Exchange Rate Management on economic growth in Nigeria between 1980 and 2015. The study was set to gauge how the management of exchange rate in Nigeria has impacted the economy. The study employed the Ordinary Least Square (OLS) method in its analysis. Co-integration and Error Correction Techniques were used to establish the Short-run and Long-run relationships between economic growth and other relevant economic indicators. The result revealed that exchange rate management proxy by various exchange rates regimes in Nigeria was not germane to economic growth. Rather, government expenditure, inflation rate, money supply and foreign direct investment significantly impact on economic growth in Nigeria. It is against this backdrop that the Nigerian economy must diversify her export base to create room for more inflow of foreign exchange.

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

Eurasian Journal of Economics and Finance ◽

10.15604/ejef.2021.09.01.004 ◽

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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Agricultural Output, Government Expenditure and Economic Growth in Nigeria: A Gregory-Hansen Cointegration Test with Structural Breaks

European Scientific Journal ESJ ◽

10.19044/esj.2021.v17n41p38 ◽

2021 ◽

Vol 17 (41) ◽

pp. 38

Author(s):

Ali Salisu ◽

Haladu Adahama Ibrahim

Keyword(s):

Economic Growth ◽

Exchange Rate ◽

Gross Domestic Product ◽

Government Expenditure ◽

Domestic Product ◽

Agricultural Output ◽

Real Gross Domestic Product ◽

Long Run ◽

Short Run ◽

Positive Effect

The agricultural sector at large plays a significant role in augmenting economic growth, serves as a source of income to the people, provides food to the teeming population, serves as a source of raw materials to the industries and provides foreign exchange to the country, etc. The current study investigates the short-run and long-run relationship among agricultural output, Government expenditure, and Economic growth in Nigeria using annual time series data from 1985 to 2019. The Zivot-Andrew unit root test indicates that gross domestic product, agricultural output, and exchange rate are stationary at first difference while government expenditure is stationary at level. The Gregory-Hansen test with structural break has confirmed the existence of a cointegration relationship among the variables employed. The Autoregressive Distributive Lag (ARDL) model with break indicates that, in the short-run agricultural output has a negative and statistically insignificant effect on real gross domestic product Nigeria, government expenditure has a positive and statistically significant effect on real gross domestic product in Nigeria, and the exchange rate has a positive and statistically significant effect on real gross domestic product in Nigeria. The break-point coefficient has positive and statistically significant. The long-run result shows that agricultural output has a positive effect on the real gross domestic product in Nigeria, government expenditure has a positive effect on real gross domestic product in Nigeria, and the exchange rate has positive effects on the real gross domestic product in Nigeria. The break coefficient shows positive and statistically significant. The study recommends that the Nigerian government should reduce the lending rate on agriculture and provide incentives to the farmers, this will encourage farmers to borrow and consequently, agricultural output will increase and the Nigerian government should increase its expenditure on agriculture to boost the sector and achieve higher economic growth.

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ANALISIS PENGARUH PRODUK DOMESTIK BRUTO, TINGKAT INFLASI, DAN NILAI TUKAR RUPIAH ATAS US DOLLAR TERHADAP IMPOR INDONESIA PERIODE 2010.Q1 – 2017.Q4

Visi Sosial Humaniora ◽

10.51622/vsh.v1i1.31 ◽

2020 ◽

Vol 1 (1) ◽

pp. 31-43

Author(s):

Jusmer Sihotang ◽

Yabes Gulo

Keyword(s):

Exchange Rate ◽

Gross Domestic Product ◽

Inflation Rate ◽

Domestic Product ◽

Series Data ◽

Multiple Regression Equation ◽

Independent Variables ◽

Real Gross Domestic Product ◽

Us Dollar ◽

The Impact

This study aims to analyze the effect of Gross Domestic Product (GDP), inflation rate, and the Indonesian Rupiah (IDR) exchange rate to US Dollar on Indonesian imports. The study uses multiple regression equation models using secondary time series data in the period of 2010.Q1 to 2017.Q4. The results showed that the coefficient sign of each regression independent variable (real Gross Domestic Product, inflation rate, and Indonesian Rupiah (IDR) exchange rate on US Dollar) were in accordance with theoretical expectations, and all of these independent variables could explain for 60.3 percent of the diversity of the dependent variable namely imports Indonesia. Both simultaneously and individually all these independent variables significantly influence Indonesia's imports at the level of α = 1%. The real Gross Domestic Product and inflation rate have a positive and significant effect on Indonesian imports, while the Indonesian Rupiah (IDR) exchange rate on US Dollar has a negative and significant effect on Indonesia's imports. Based on the results of the study, in order to control Indonesia's imports in the future, a policy should be guarantee the availability of various imported substitution products, easy to obtain, and can compete with imported products. Thus the impact of the increase in Gross Domestic Product, an increase in the inflation rate, and the appreciation of the rupiah against the increase in Indonesian imports will be controlled.

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AGRICULTURAL FINANCE AND ECONOMIC GROWTH: EVIDENCE FROM NIGERIA

Verslas teorija ir praktika ◽

10.3846/btp.2019.43 ◽

2019 ◽

Vol 20 (0) ◽

pp. 467-475

Author(s):

Funso Abiodun Okunlola ◽

Godswill Osagie Osuma ◽

Ehimare Alexander Omankhanlen

Keyword(s):

Gross Domestic Product ◽

Time Series Data ◽

Wald Test ◽

Domestic Product ◽

Series Data ◽

Agricultural Finance ◽

Real Gross Domestic Product ◽

Distributed Lag ◽

Long Run ◽

The Impact

The study performed an in-depth examination of the impact of guaranteed agricultural finance to oil palm, cocoa, groundnuts, fishery, poultry, cattle, roots, and tubers on the real gross domestic product of the country. Time series data was sourced from the Central Bank of Nigeria statistical bulletin of various issues. The data sets covered thirty-seven (37) years spanning from 1981 to 2017. The study used Autoregressive Distributed Lag (ARDL) model for its analysis. However, prior estimation and due to several exogenous variables, Phillip Perron stationarity test was used to determine the order of integration because of its robustness to serial correlation and heteroskedasticity. The study also specified the lag criterion based on LR, FPE, AIC, SC, and HQ using Newey-West covariance matrix estimator. Findings from both short-run and long-run models as confirmed by the Wald test, which shows that none of the guaranteed agricultural finance is statistically significant to real gross domestic product. The study, therefore, recommends increased funding and deliberate efforts at determining which of the nominated agricultural spending has the most contributory impact on growth.

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Government Expenditure and Inflation in Nigeria

Journal of Economics and Management Sciences ◽

10.30560/jems.v3n2p29 ◽

2020 ◽

Vol 3 (2) ◽

pp. p29

Author(s):

Chioma Chidinma George-Anokwuru ◽

Bosco Itoro Ekpenyong

Keyword(s):

Money Supply ◽

Inflation Rate ◽

Government Expenditure ◽

Distributed Lag ◽

Distributed Lag Model ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run ◽

Lag Model ◽

The Impact

The impact of government spending on Nigeria’s inflation levels between 1999 and 2019 was x-rayed in this paper. The data for the study were sourced from CBN statistical bulletin and Autoregressive Distributed Lag model was used as the main analytical tool. A long-run relationship among this study’s variables was realized, using the ARDL Bounds test. The result also revealed a positive but insignificant relationship between government expenditure and inflation rate in the short-run. Moreover, in the long-run, government expenditure has negative and is statistically significant inflation rate. Money supply has a negative and is statistically insignificant with inflation rate in the short-run. In the long-run, money supply has a positive and significant relationship with inflation rate. Gross domestic product was negatively related to inflation rate in both short-run and long-run. Moreover, exchange rate affected inflation rate negatively and significantly in the short-run and positively and significantly in the long-run. The increasing demands of the population affected inflation rate positively and significantly in both short-run and long-run. Investment was positively related to inflation rate but not significant in the short-run but the relationship was negative and significant in the long-run. The study therefore recommended among others that government should exercise discretion in spending in order to check inflation rate. This can be done by channeling spending on productive activities that will cushion the effect of inflation rate rather than exacerbate it.

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The Determinants Factors of Balance of Payments: An Investigation from Sudan through the Period 1980-2016

Edelweiss Applied Science and Technology ◽

10.33805/2576.8484.114 ◽

2018 ◽

pp. 41-46 ◽

Cited By ~ 1

Author(s):

Faroug Mohammed Khalid Yousif ◽

Almahdi Musa Attahir Musa

Keyword(s):

Exchange Rate ◽

Gross Domestic Product ◽

Foreign Debt ◽

Balance Of Payments ◽

Domestic Product ◽

Annual Data ◽

Economic Policies ◽

Macroeconomic Policies ◽

Foreign Countries ◽

The Impact

This paper investigates the determinants of Sudan balance of payments using annual data on Balance Of Payments (BOP), foreign debt (ED), Exchange Rate (EX), inflation (INF), Gross Domestic Product (GDP) during the period (1980 - 2016). The paper elaborates the problem regarding the impact of foreign debt on the balance of payments. The paper built on the fundamental assumption that the foreign debt linked to a positive relationship with the balance of payments by running VECM Approach. Results of the study indicate that there is a direct correlation between the balance of payments and foreign debt, and an inverse relationship between the balance of payments and all of the inflation, gross domestic product and exchange rate during the fore mentioned period. The paper recommends that Sudan should not totally depends on foreign aid in solving its economic problems which entails to transfer big amount of the national product to meet the commitments towards those foreign countries, the need for coordination between macroeconomic policies and domestic economic policies in order to increase output domestic product, economic policies are functioning to reduce the ratio of foreign debt and the reduction of inflation and bring about stability in the exchange rate which leads to improving the balance of payments to be adopted by Sudan.

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Mobile Money Use: The Impact of Macroeconomic Policy and Regulation

Economies ◽

10.3390/economies9020051 ◽

2021 ◽

Vol 9 (2) ◽

pp. 51

Author(s):

Lorna Katusiime

Keyword(s):

Exchange Rate ◽

Interest Rates ◽

Financial Innovation ◽

Macroeconomic Policy ◽

Mobile Money ◽

Distributed Lag ◽

Distributed Lag Model ◽

Long Run ◽

Short Run ◽

The Impact

This paper examines the effects of macroeconomic policy and regulatory environment on mobile money usage. Specifically, we develop an autoregressive distributed lag model to investigate the effect of key macroeconomic variables and mobile money tax on mobile money usage in Uganda. Using monthly data spanning the period March 2009 to September 2020, we find that in the short run, mobile money usage is positively affected by inflation while financial innovation, exchange rate, interest rates and mobile money tax negatively affect mobile money usage in Uganda. In the long run, mobile money usage is positively affected by economic activity, inflation and the COVID-19 pandemic crisis while mobile money customer balances, interest rate, exchange rate, financial innovation and mobile money tax negatively affect mobile money usage.

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VECTOR AUTOREGRESSIVE APPROACH AFTER FIRST DIFFERENCING: A TIME SERIES ANALYSIS OF INFLATION AND ITS DETERMINANTS IN TANZANIA

Oradea Journal of Business and Economics ◽

10.47535/1991ojbe128 ◽

2021 ◽

pp. 43-56

Author(s):

Rachel R. Cheti ◽

Bahati Ilembo

Keyword(s):

Time Series ◽

Exchange Rate ◽

Gross Domestic Product ◽

Money Supply ◽

Inflation Rate ◽

Negative Impact ◽

Causal Effect ◽

Domestic Product ◽

Series Data ◽

Vector Autoregressive

The objective of the study was to examine the trend of inflation and its key determinants in Tanzania. We used secondary time series data observed annually from January 1970 to 2020 which are inflation rate, GDP, Exchange rate and money supply. The vector autoregressive (VAR) model was employed for modeling. Augmented Dickey-Fuller test (ADF) found that inflation rate, Gross Domestic Product (GDP), exchange rate and Money supply (M3) were initially non-stationary but they became stationary after first differencing so as to proceed with the analysis. Preliminary tests before obtaining vector auto regressive model were carried out before determining the relationship between the variables. Diagnostic test such as serial correlation, heteroscedasticity, stability and normality were also important to evaluate the model assumptions and investigate whether or not there are observations with a large, undue influence on the analysis. We used Granger causality test (GCT) to determine causal- effect relationship between the variables. The results show that, there is a long run relationship between the variables, also the results showed that exchange rate and money supply (M3) both have a positive impact on inflation rate while gross domestic product (GDP) revealed a negative impact on inflation rate. Finally, the forecast of inflation rate for 15 years ahead was performed. The study recommends that the government should pursue both contractionary monetary policy and fiscal policy in order to control inflation in the country.

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