Government Policy, Foreign Direct Investment and Unemployment in Emerging Economies

The broad objective of this study is to determine how government policy influences FDI as well as how FDI affects the level of unemployment as a proportion of labour force in emerging economies. The techniques of analysis are a descriptive statistic and panel regression based on Ordinary Least Squares Method. Evidence from the descriptive analysis affirms that the variables of the study for each country exhibit contradictory behaviour in 1991-2016. In the same period, the big beneficiaries of the net inflow FDI are not experiencing the lowest unemployment rate. Panel regression results (2000-2015) suggest that net inflow of FDI has a negative influence on unemployment while government policy has no significant effect on the net inflow of FDI. The study concludes that a continuous inflow of net foreign investment is a good source of creating jobs in emerging economies. Due to the lack of influence of government policy on the net inflow of FDI, the study recommends that emerging economies should revise the regulation on the freedom to trade internationally so as to enhance the continuous flow of foreign direct investment.  &nbsp

Effects of Climate Change on the Long-run Crops’ Yields in Nigeria

The study investigated the impact of climate change on yields of leading food crops in Nigeria and assessed the transmission channels of climate shocks to welfare. Long-run causality test, Markov-switching regression and Structural Vector Autoregressive (SVAR) model were used. Long-run causality between climate change and crop yields was not rejected. A rise in temperature by 1% reduces crop yields by -0.12% in the regime of high yield while 1% increase in rainfall increases yields by 0.21% and 0.26%, respectively in high and low yield period. Shocks to welfare is traceable to climate change via crop yields and food prices effect

Uncertainty of Output Gap and Monetary policy Making in Nigeria

A major challenge of monetary policy is the attainment of sustainable output level but in setting the optimal monetary policy rate information of the output gap but how uncertainty of the gap affects the path of monetary policy rate is crucial for policy use. The investigation of this phenomenon in Nigeria was mostly concerned with how monetary policy affects output. In view of the dearth of studies on uncertainty and monetary policy in Nigeria, this paper investigates the effect of output gap uncertainty on monetary policy rate in Nigeria-1991Q1-2014Q4. The paper relies on the New Keynesian economics and employs the GARCH-GMM econometric technique for analyses. Evidence from the study shows that real output gap and inflation uncertainty are statistically significant with estimated values of        respectively. The coefficient of the real output variable is significant with a coefficient estimate of    while we found no strong evidence to support the effect of inflation on monetary policy rate.  The inference from our findings is that monetary policy is less responsive to uncertainty of real output gap. We therefore recommend that the Central Bank of Nigeria should consider uncertainty of both inflation and output variables when setting the policy rate.&nbsp

Do Financial and Trade Openness Lead to Financial Sector Development in Nigeria?

With so many countries of the world now open to global capital and trade, this study identifies whether financial and trade openness contribute to the development of Nigeria’s financial system by considering both financial depth and access to finance indicators. To achieve this objective, we applied the Simultaneous Openness Hypothesis as our theoretical framework and the Generalized Method of Moments (GMM) as our estimation method. Our findings reveal that opening trade while neglecting capital (vice versa) may be detrimental to the development of Nigeria financial system. In view of this evidence, we recommend that the simultaneous opening of trade and finance is a more guaranteed way of ensuring improved financial development in Nigeria

Uncertainty of stock market price behaviour and monetary policy: Evidence from Nigeria

This paper attempts to answer the question of how the uncertainty of stock price behaviour affected monetary policy decisions in Nigeria during the period 1991Q1- 2015Q4. Although studies have been conducted on how the stock market responds to monetary policy decisions there is a paucity of analysis on how stock prices and the uncertainty of stock prices affect monetary policy, especially in Nigeria. Data was obtained from the Central Bank of Nigeria statistical database. Both Generalised Autoregressive Conditional Heteroskedasticity modelling and Generalised Method of Moments estimation were used for analysis. Findings from the regression analysis reveal that stock prices, as well as their unpredictable behaviour, significantly affect monetary policy decisions during the period under study. Another interesting finding is that the pair of the uncertainty of real output and inflation also significantly affected the monetary policy rate and that the monetary authority was more responsive to this pair than that of inflation and stock prices. The recommendation based on our findings is that the Central Bank of Nigeria should incorporate the uncertainty of stock prices into the monetary policy model when determining the policy ratEste artículo trata de encontrar respuestas a la cuestión relativa a cómo las decisiones de política monetaria se ven afectadas por la incertidumbre sobre los precios de las acciones en el caso nigeriano (1991-2015). Aunque se han llevado a cabo algunos estudios sobre cómo responde el precio de las acciones a las decisiones de política monetaria, son muy escasos aquellos centrados en cómo los precios de los valores, y la incertidumbre sobre los mismos, afecta a las decisiones política monetaria (especialmente en Nigeria). Para dar respuesta a la anterior cuestión, se utiliza la información proporcionada por el Banco Central de Nigeria para llevar a cabo la estimación de modelos de heteroscedasticidad condicional autorregresiva, realizándose tales estimaciones con el método generalizado de los momentos. Los resultados obtenidos ponen de manifiesto que los precios de las acciones, así como su comportamiento impredecible, influyen significativamente en las decisiones de política monetaria que se tomaron en el periodo objeto de estudio. Otro resultado interesante es que la dupla “incertidumbre en la producción real e inflación” también afectó significativamente a la tasa de política monetaria, de tal manera que las autoridades monetarias fueron más sensibles a la dupla anterior que al par “incertidumbre en inflación y precios de los activos”. En base a las conclusiones obtenidas, se recomienda al Banco Central de Nigeria la inclusión de la incertidumbre en el precio de las acciones en su modelo de determinación de la tasa de política monetaria