Foreign Exchange Rate and Economic Growth Nexus: New Evidence from Nigeria (1981 to 2017)

The paper estimates the impact of foreign exchange rate on economic growth of Nigeria. The study makes used of Autoregressive Distributed Lag model (ARDL) on time series Data, for the period 1981-2017. The data set on real effective exchange rate, inflation rate, money supply, lending interest rate, real GDP and foreign direct investment, oil revenue and trade openness (% of GDP) were tested for stationary using ADF and PP tests and established stationarity at I (1) for five variables and I (0) for two variables. The correlation test result shows that the highest correlation is between money supply and oil revenue while the lowest correlation is between inflation rate and foreign direct investment. The ARDL Co-integration test revealed the existence of long-run relationship among the variables. ARDL test results reveal that real effective exchange rate is negatively and significant in explaining economic growth in Nigeria in the long-run. In the short-run, the lag value of real effective exchange rate is insignificant in explaining the changes in the current rate of economic growth. in the same period, the lag value of money supply is negative and significant in explaining GDP. But in the long run it is positive and significant in explaining economic growth in Nigeria. The rate of inflation both in the short run and long run is negatively and significant in explaining GDP. The Error Correction Term value of 20.7% shows the speed of adjustment toward long-run equilibrium The findings of the study imply that interest rate in Nigeria is inflationary. Meaning that increase in the rate of interest rate will lead to an increase inflation rate. Therefore, the research study concludes that the impact of foreign exchange rate on the economic growth of Nigeria is negative and significant and that the monetary authorities should adopt flexible exchange rate in Nigeria. Keywords: ARDL, foreign exchange rate, Economic growth, monetary authorities. DOI: 10.7176/JESD/10-18-18 Publication date:September 30th 2019

Impact of Population Growth on Unemployment in Nigeria: Dynamic OLS Approach

This empirical research examined the impact of population growth on unemployment in Nigeria. The study applied annual time series data from 1991 to 2017. The data on population, unemployment, consumer price index, exchange rate and foreign direct investment were tested for unit root using ADF, PP and KPSS unit root tests. The results from the ADF and PP tests revealed that all the variables were stationary at first difference except CPI that is stationary at level. While the KPSS units root test result shows that all the variables are stationary at level. The variables were co-integrated as shown by the Johansen Juselius test for co-integration. The Dynamic Ordinary Least Squares (DOLS) were used in the process of estimating the model. The main results disclosed that population and exchange rate impacted positively with unemployment. Whereas consumer price index, GDP per capita and foreign direct investment impacted negatively thereby reducing the rate of unemployment in the long-run. Government should focus more on attracting foreign direct investment, increasing GDP per capita and the desired rate of consumer price index in order to control the rate of unemployment in the country. Keywords: Population Growth, Unemployment, Dynamic Ordinary Least Squares, Co-integration test, GDP per capita, Consumer Price Index, Foreign Direct Investment. DOI: 10.7176/JESD/10-22-09 Publication date: November 30th 2019

Interest Rate and Inflation Nexus: ARDL Bound Test Approach

The paperestimates the impact of interest rate on inflation in Nigeria. The study makes used of Autoregressive Distributed Lag model (ARDL) on time series Data, for the period 1970-2016. The data set on inflation, money supply, interest rate, GDP per capita and exchange rate were tested for stationary using ADF, PP and KPS tests and established stationarity at I (1) for all the variables. ARDL testresults reveal that interest rate is inflationary in both the short-run and long-run as it positively and significantly influencing inflation in the two periods which is in conformity with the arguments of the fiscal policy supporters but contradict the arguments of the monetary policy supporters. The findings of the study imply that interest rate in Nigeria is inflationary. Meaning that increase in the rate of interest rate will lead to an increase inflation rate. Therefore, the research study conclude that interest rates should be adjusted with caution, and also implies that fiscal policy measure will be very effective in converting inflation in the country. Keywords:ARDL Bound Test, Interest Rate, Inflation, Exchange Rate, Fiscal Policy, Monetary Policy. DOI: 10.7176/JESD/10-20-07 Publication date:October 31st 201

Causal Relationship among Domestic Oil Price, Exchange Rate and Inflation in Nigeria: An Application of VECM Granger Causality Procedure

The purpose of this paper is to investigates the causal association among domestic oil price, exchange rate and inflation rate for the sample period of 1985 to 2019 in Nigeria. Johansen test for cointegration and technique of vector error correction model Granger causality were utilized. The outcome from Johansen cointegration test revealed that there is strong cointegration between the variables and vector error correction model Granger causality outcome indicates that one-way causalities exist running from exchange rate to inflation rate and exchange rate to domestic oil price with no long-run causalities in inflation rate and domestic oil price equations. Again, there are unidirectional causalities running from domestic oil price to exchange rate and inflation to exchange rates together with long-run causality in the exchange rate equation only. According to the current investigation Nigeria could be more prosperous, if the country’s monetary authorities would consider policy thrust that aim at targeting both inflation and exchange rates, alongside maintaining a stable petroleum pump price by the Petroleum Products Pricing Regulation Agency (PPPRA) in order to aid in curtailing the increasing rate of inflation in the country

Investments and Unemployment Nexus in Nigeria: an Application of Vector Error Correction Model (VECM)

The main objective of this paper is to examine the nexus between investments and unemployment in Nigeria using data for the period of 1991 to 2019 and employed VECM to realize the objective. Result from VECM estimation revealed that domestic and foreign investments were negative and significantly associated with unemployment while economic and population growths had significant positive relationship with unemployment in the long-run with all the short-run coefficients were insignificant. Therefore, it is recommended that government should provide conducive investment atmosphere for foreign investors in order to attract foreign investment in the country since it has negative impact on unemployment. On the other hand, access to finance at a subsidized interest rate to domestic investors should be one of the top policy priorities because high cost of borrowing reduces the opportunities for domestic investment and investors in the real sector of the economy should be considered for taxes concession basically due to the sector’s direct effect on employment in the country. More so, population growth checking measures should be re-emphasized and by so doing it will go a long way in reducing the rate of unemployment in country

Impact of Foreign Aid on Education and Health Outcomes in Nigeria: A Disaggregate Analysis

This paper utilized time series data from the most populace country in the black race, two measures of human development (education and health) and foreign aid were considered, and a dynamic ordinary least square (i.e., dynamic and fully modified ordinary least squares) and vector autoregressive model estimators were engaged to analyzed the data for the 1980-2019 to investigates the effect of foreign aid on education and health outcomes in Nigeria.  Specifically, we examined whether foreign aid targeted to education or the health sector increases primary school enrollment and completion rates and whether foreign aid to the health sector increases the life expectancy rates. Our findings revealed that foreign aid has significant positive impact on primary school enrollment and completion rates. Similarly, foreign aid to the health sector significantly exerts positive impact on life expectancy rate in Nigeria even though the effect of foreign aid on primary education and health sectors may be different on disaggregate approach from the aggregate approach outcomes in these sectors. We have also found no evidence of fungibility of foreign aid to primary education and health sectors in our utilized sample

Investigating the Effect of Petroleum Subsidy Removal on Standard of Living Amidst Rising Poverty in Nigeria

Nigeria, as an oil-dependent economy has long relied on petroleum subsidy to ensure affordable fuel prices for its citizens. The country provided subsidy on petroleum products to mitigate the effects of rising fuel prices on the population. However, in recent years, the country has faced numerous challenges including the rising rate of inflation, unemployment and increase in poverty rates. Based on these challenges, the decision to remove petroleum subsidy has had a significant impact on the general standard of living implying that, subsidy removal had a direct impact on the people’s welfare and the country’s economy. Therefore, this research paper investigates the effect of petroleum subsidy removal by the recently inaugurated government of Nigeria on standard of living of the population at the peak of rising level of poverty in the country. To achieve this objective, the background of the problem was discussed, review of related literature was undertaken and the possible recommendations were suggested towards mitigating the severe effect of petroleum subsidy removal on the general living standard of the population