313 research outputs found
Estimating the long run effects of exchange rate devaluation on the trade balance of Nigeria.
This paper attempts an empirical investigation of the impact of currency devaluation on Nigeria trade balance using the Johansen co-integration and variance decomposition analyses from 1970-2010; whether exchange rate devaluation improves or worsens trade balance has been at the centre of literature debate over time with varying empirical evidences for developed and developing nation. The empirical results indicate that there exist a long-run stationary relationship between trade balance and its determinant- domestic income, domestic and foreign money supply, domestic interest rate and nominal exchange rate; as employed in the study. Also, there exists an inelastic and significant relation between trade balance and its determinants. Our major findings include; exchange rate induce an inelastic and significant relation on trade balance in the long run, there exist no short run causality from exchange rate to trade balance and money supply volatility contributes more to variance in trade balance than exchange rate volatility. The paper concludes with important implications for policy makers because it provides evidence supporting that fact that level of money supply has a major impact on trade balance adjustment and that devaluation of the exchange rate worsens the trade balance of Nigeria in the long run
Does Government Expenditure Spur Growth In ECOWAS?
The paper attempts to investigate the relationship between government expenditure and economic growth in fifteen ECOWAS countries for the period of 2000-2010. The study adopts a panel data framework using the fixed and random effect model; the Hausman test employed in the model emphasized the appropriateness of the fixed effect model. The study found the indicator of government expenditure to induce a positive inelastic variation on economic growth; while the growth rates of government expenditure induce a nearly perfect inelastic negative variation on the GDP growth rates, this would not be unconnected with the weak fiscal discipline in the Nigerian economy. Our finding from estimation of growth rates is more pertinent to this study since the inclusion of rates would have accounted for the periodic effect. Prominent policy recommendation is the need to develop institutions that would ensure realistic, transparent and appropriate channelling of government expenditure towards productive economic activities
Management of anaphylaxis
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Exchange Rate Pass-Through to Consumer Prices in Nigeria
The increasing overdependence of Nigerian economy on imports has necessitated the need to continually examine the effect of exchange rate shocks in consumer prices. The paper adopts a Structural Vector autoregressive to estimate the pass-through effect of exchange rate changes to consumer prices. Using the Variance Decomposition analyses, the study found a substantially large exchange rate pass-through to inflation in Nigeria. Finding shows that exchange rate has been more important in explaining Nigeriaâs rising inflation phenomenon than the actual money supply. Therefore, it is recommended that Nigerian economy focuses on policies that ensure exchange rate stability and sound monetary surveillance
Electricity Consumption and Economic Growth in Nigeria
The paper seeks to examine the relationship between electricity consumption and economic growth in Nigeria using the Johansen and Juselius Co-integration technique based on the Cobb-Douglas growth model covering the period 1980-2008. The study adopted also conducted the Vector Error Correction Modelling and the Pairwise Granger Causality test in order to empirically ascertain the error correction adjustment and direction of causality between electricity consumption and economic growth. The study found the existence of a unique co-integrating relationship among the variables in the model with the indicator of electricity consumption impacting significantly on growth. Also, the study shows an evidence of bi-directional causal relationship between electricity consumption and economic growth. Prominent among the policy recommendation, is the need to strengthen the effectiveness of energy generating agencies by ensuring periodic replacement of worn-out equipment in order to drastically curtail transmission power losses
Interest Rate Pass-Through to Macroeconomic Variables: The Nigerian Experience
The effectiveness of monetary policy depends on the adjustment response of Central Banks short-term interest
rate on the real interest rates charged by commercial banks and ultimately on macroeconomic indicators of
investment and consumption in the economy. Thus, the extent of interest rate pass-through largely depends on
how effective the process of financial intermediation works and to what extent individual bank characteristics
influence or hinder a perfect adjustment of product rates based on market conditions. The study examines the
speed and completeness of pass-through from policy rates to retail bank rates and the effectiveness of monetary
policy stance in influencing macroeconomic policy targets using a co-integration analysis based on Johansen and
Juselius maximum likelihood and Engle-Granger two step procedures for the period 1970â2011. The VAR based
Error Correction Model (ECM) and the Mean Adjustment Lag (MAL) was used to determine the short run
estimates and asymmetric behaviour respectively. The study found an evidence of downward stickiness both in
the short-run and long-run policy pass-through to the retail bank rates. In order to ensure robustness of the result,
the Impulse Response Function (IRF) and Variance Decomposition (VD) analysis were conducted and similar
slow and sluggish pass-through was obtained. The study as well, found pass-through from policy rate to
macroeconomic variables to exhibit extremely rigid immediate responses
Oil Price and Exchange Rate Volatility in Nigeria
Oil as the mainstay of the Nigerian economy, accounts for over 95 percent of its foreign earnings
and about 83 percent of its budgetary allocation, to this end, changes in oil prices has implications for the
Nigerian economy and, in particular, exchange rate movements. The latter is mostly important due to the double
dilemma of being an oil exporting and oil-importing country, a situation that emerged in the last decade. The
study examined the effects of oil price, external reserves and interest rate on exchange rate volatility in Nigeria
using annual data covering the period 1970 to 2011. The long run relationship among the variables was
determined using the Johansen Co-integration technique while the vector correction mechanism was used to
examine the speed of adjustment of the variables from the short run dynamics to the long run equilibrium. It was
observed that a proportionate change in oil price leads to a more than proportionate change in exchange rate
volatility in Nigeria; which implies that exchange rate is susceptible to changes in oil price. The study therefore
recommend that the Nigeria government should diversify from the oil sector to other sectors of the economy
hereby dwindling the impact of crude oil as the mainstay of the economy and overcome the effect of incessant
changes in crude oil prices which often culminate into macroeconomic instabilit
Electricity Consumption and Economic Development in Nigeria
The study examines the relationship between electricity consumption and economic development using an extended neoclassical model for the period 1970-2013. The study incorporates the uniqueness of the Nigerian economy by controlling for the role of institutions, technology, emissions, and economic structure in the electricity consumption-development argument. The study adopted a cointegration analysis based on the Johansen and Juselius (1981) maximum Likelihood approach and a vector error correction model. In order to ensure robustness, the study adopted the wald block endogeneity causality test to ascertain the direction of causal relationship between electricity consumption and economic development. The study found an existence of long-run cointegration equation with electricity consumption inversely related to economic development. Likewise, the vector error correction model failed to reject the null hypothesis of non-convergence in the long-run. Finally, the study found evidence supporting unidirectional causal relationship running from economic development to electricity consumptio
Is Aid Really Dead? Evidence from Sub-Saharan Africa
This study examined the relationship between foreign aid and economic development in Sub-Saharan Africa. The
study seeks to examine the role of macroeconomic policy in aid effectiveness in SSA countries by adopting a
theoretical framework similar to the Endogenous/New Growth model and the System Generalized Method of
Moments (GMM) technique of estimation in attempt to overcome the challenge of endogeneity perceived in the
institution variables and aid-growth nexus. It was observed that foreign aid does not significantly influenced Real
GDP Per Capita in Sub-Saharan Africa, but the relation reverses after controlling for the role of economic
policy; though the response of real GDP per capita tends to be infinitely inelastic. Subsequently, capital stock,
labour force, institutional quality and human capital meaningfully contributed to economic development in SSA
Large Scale Foreign Land Deals and Agricultural Trade in Africa
This study investigates the implications of foreign land deals in Africa especially with regard to
agricultural trade. It is motivated essentially by large scale foreign land deals in Africa, Latin
America, Central Asia and Southeast Asia. The empirical model adopted is based on institutional
development theory and estimated using the Generalized Method of Moments (GMM). The study
found that large scale foreign land deals (LSFLDs) impact negatively on agricultural export in
selected countries and the indexes of institutional framework used were found to be significant.
Likewise, agricultural land becomes highly significant with relatively larger magnitude when interacted with institutional indexes. This therefore implies that as more agricultural land is
acquired, agricultural export tends to dwindle and incidences of food insecurity are heightened. The
evidence from empirical investigation suggests the need for controlling the issue of massive foreign
land deals through viable institutional framework, which can be engendered by building sound legal
and procedural measures that will protect local rights and take into account the aspirations of local
farmers and the welfare of citizenr
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