Exchange Rate Volatility and Export Trade in Nigeria: An Empirical Investigation

The paper seeks to quantitatively assess the impact of exchange rate volatility on non oil export flows in Nigeria. Theoretically, volatility-trade link is ambiguous, although a strand of studies reported inverse link between export flow and volatility. The paper employed fundamental analysis where the flow of non oil exports from the Nigerian economy is assumed to be predicated on fundamental variables: the naira exchange rate volatility, the US dollar volatility, Nigeria’s terms of trade (TOT) and index of openness (OPN). Empirical results showed presence of unit root at level, however, the null hypothesis of nonstationarity was rejected at first difference. Cointegration results revealed that a stable long run equilibrium relationship exists between non oil exports and the fundamental variables. Using quarterly observations for twenty years, vector cointegration estimate revealed that the naira exchange rate volatility decreased non oil exports by 3.65% while the same estimate for the US dollar volatility increased export of non oil in Nigeria by 5.2% in the year 2003. The paper recommends measures that would promote greater openness of the economy and exchange rate stability in the economy

Real Exchange Rate Misalignment: An Application of Behavioral Equilibrium Exchange Rate (BEER) to Nigeria

Abstract This paper seeks to estimate the long run behavioral equilibrium exchange rate in Nigeria. The empirical analysis builds on quarterly data from 1986Q1 to 2006Q4 and derives a Behavioral Equilibrium Exchange Rate (BEER) and a Permanent Equilibrium Exchange Rate (PEER). The econometric analysis starts by analyzing the stochastic properties of the data and found all the variables stationary at first level of differencing. Accordingly, the paper proceeds by estimating vector-error correction models. Regression results show that most of the long-run behavior of the real exchange rate could be explained by real net foreign assets, terms of trade, index of crude oil volatility, index of monetary policy performance and government fiscal stance. On the basis of these fundamentals, four episodes each of overvaluation and undervaluation were identified and the antecedents characterizing the episodes were equally traced to the archive of exchange rate management in the country within the review period. Among others for instance, large inflow of oil revenues into the country and stable macroeconomic performance were discovered to account for undervaluation of the real exchange rate between 2001Q1 and 2006Q4 in Nigeria. The results further suggest that deviations from the equilibrium path are eliminated within one to two years. The paper recommends the pursuance of sound monetary policy as an instrument for achieving real exchange rate cum macroeconomic stability in Nigeria.Keywords: real exchange rate equilibrium, stationarity, cointegration, Hodrick-Prescott decomposition, BEER and PEER

Exchange Rate Volatility and Export Trade in Nigeria: An Empirical Investigation

The paper seeks to quantitatively assess the impact of exchange rate volatility on non oil export flows in Nigeria. Theoretically, volatility-trade link is ambiguous, although a strand of studies reported inverse link between export flow and volatility. The paper employed fundamental analysis where the flow of non oil exports from the Nigerian economy is assumed to be predicated on fundamental variables: the naira exchange rate volatility, the US dollar volatility, Nigeria’s terms of trade (TOT) and index of openness (OPN). Empirical results showed presence of unit root at level, however, the null hypothesis of nonstationarity was rejected at first difference. Cointegration results revealed that a stable long run equilibrium relationship exists between non oil exports and the fundamental variables. Using quarterly observations for twenty years, vector cointegration estimate revealed that the naira exchange rate volatility decreased non oil exports by 3.65% while the same estimate for the US dollar volatility increased export of non oil in Nigeria by 5.2% in the year 2003. The paper recommends measures that would promote greater openness of the economy and exchange rate stability in the economy.exchange rate volatility, non oil exports, terms of trade, index of openness, unit root and cointegration analysis

Stock Prices and Exchange Rate Interactions in Nigeria: An Intra-Global Financial Crisis Maiden Investigation

This paper examined the long run and short run interactions between stock prices and exchange rate in Nigeria based on a sample from 1st February, 2001 to 31st December, 2008. Three models were derived from the sample, albeit pre-crisis, crisis and basic models. The paper set out by testing the time series properties of the series using the ADF and PP tests. In addition, the Engle and Granger two-step and Johansen and Juselius cointegration procedures were applied. Empirical results showed that all the series are I(1) and evidence of cointegration was established using the Johansen and Juselius methodology. Furthermore, causality tests revealed strong evidence of long run bidirectional relationship between stock prices and exchange rate in the models. Policy wise, the findings implied that monetary authorities in Nigeria are not constrained to take into account stock market development in achieving their exchange rate policy objective given the symbiotic nature of relationship between the two. The paper recommends measures that would promote greater stability and efficiency of the Nigeria’s foreign exchange marketStock prices, exchange rate, Granger causality, cointegration and vector error correction

Oil Price Shocks and the Macroeconomy of Nigeria: A Non-linear Approach

Nowadays, the impact of oil price shocks is pervasive as it virtually affects all facets of human endeavor. As such, it is pertinent that we should know the relationship between oil price shocks and the macroeconomy. Therefore, this paper assesses empirically, the effects of oil price shocks on the real macroeconomic activity in Nigeria. Granger causality tests and multivariate VAR analysis were carried out using both linear and non-linear specifications. Inter alia, the latter category includes two approaches employed in the literature, namely, the asymmetric and net specifications oil price specifications. The paper finds evidence of both linear and non-linear impact of oil price shocks on real GDP. In particular, asymmetric oil price increases in the non-linear models are found to have positive impact on real GDP growth of a larger magnitude than asymmetric oil price decreases adversely affects real GDP. The non-linear estimation records significant improvement over the linear estimation and the one reported earlier by Aliyu (2009). Further, utilizing the Wald and the Granger multivariate and bivariate causality tests, results from the latter indicate that linear price change and all the other oil price transformations are significant for the system as a whole. The Wald test indicates that our oil price coefficients in linear and asymmetric specifications are statistically significant.Oil Shocks, Macroeconomy, Granger Causality, Asymmetry, Vector Autoregressive

Does inflation has an Impact on Stock Returns and Volatility? Evidence from Nigeria and Ghana

This study seeks to apply the generalized autoregressive conditional heteroskedasticity (GARCH) model to assess the impact of inflation on stock market returns and volatility using monthly time series data from two West African countries, that is, Nigeria and Ghana. In addition, the impact of asymmetric shocks was investigated using the quadratic GARCH model developed by Sentana (1995), in both countries. Results for Nigeria show weak support for the hypothesis which states that bad news exert more adverse effect on stock market volatility than good news of the same magnitude; while a strong opposite case holds for Ghana. Furthermore, inflation rate and its three month average were found to have significant effect on stock market volatility in the two countries. Measures employed towards restraining inflation in the two countries, therefore, would certainly reduce stock market volatility, improve stock market returns and boost investor confidence.Stock Returns, Volatility, inflation

Imports-Exports Demand Functions and Balance of Payments Stability in Nigeria: A Co-integration and Error Correction Modeling

Abstract This paper assesses the determinants of import and export demand functions. The object is to empirically measure the relative strengths and weaknesses of the determinants import and export, and to examine, using the Marshall-Lerner hypothesis, the condition under which balance of payments adjustment works in the Nigerian economy. The analytical framework employed is an econometric methodology, which encompasses wide a range of tests for stationarity, cointegration and specification of an error correction model. Using data obtained from the Nigerian economy covering the period of 1970 to 2004, result of over-parameterized error correction model show significant causational relationships in the two models. Specifically, from the values of the coefficient of the current and past (lag) level of exchange rate in the two models, the paper knots balance of payments adjustment to regime of exchange rate stability in Nigeria. The paper, therefore, recommends exchange rate adjustment as potent instrument of achieving balance of payments stability in Nigeria.Keywords: Imports, exports, stationarity, cointegration, Balance of Payments

Reactions of stock market to monetary policy shocks during the global financial crisis: the Nigerian case

This paper seeks to assess the reactions of Nigeria’s stock market to monetary policy innovations during the period of global financial crisis on the basis of monthly data over the period January, 2007 to August, 2011. In particular, stock market return was regressed against major monetary policy instruments; money stock (M1, and M2) and monetary policy rate (MPR). The theoretical basis for the paper stems from the works of new classical macroeconomics, rational expectation hypothesis. Lucas (1972) postulates that the unanticipated and not anticipated monetary shock influences real economic activity. Using the GARCH by developed Engle and Bollerslev (1986) and EGARCH by Nelson (1991) methodologies, the paper empirically assessed the impact monetary policy innovations exerts on stock returns in the Nigeria’s Stock Exchange (NSE) market during the period of the crisis. Results from the empirical analysis revealed that the unaticipated component of policy innovations on M2 and MPR exerts distabilizing effect on NSE’s returns, whereas the anticipated component does not. This lends support to the REH argument for the Nigerian stock market. The pqper strongly recommends realistic and timely policy pronouncements by the MPC to achieve stability in the market.Monetary Policy, GARCH, EGARCH, Rational Expectation Hypothesis

The effects of undernutrition on reproduction in goats

It has been generally accepted that nutrition is one of the most important factors that affects reproductive performance in livestock. The impact of feed-restriction has however rarely been investigated in the goat because of the relative unimportance of the species in the developed countries, and the common assumption of its similarity to sheep and cattle. The recent increase in demand for high quality fibre in the developed countries and for animal protein in the Third World has however awakened interest in the species. The aim of this project was to provide information on the effects of undernutrition on the oestrous cycle and on pregnancy in goats.Restriction of feed intake to only 25% of maintenance requirement from 19 days prior to oestrus reduced the number of goats that exhibited oestrus following synchronization with intravaginally inserted progestagen-impregnated sponges, reduced ovulation rate and the incidence of twin and triple ovulations and reduced the number of goats that became pregnant. A trial which examined superovulation of goats with porcine FSH suggested no effect of undernutrition on the superovulatory response and early development of goat embryo.Feed restriction for 19 days before and 60 days after mating reduced the size and weight of foetuses and the mass of foetal fluids and tended to reduce the weight of the cotyledonary component of the placenta without affecting the number of placentomes. While length of gestation had a significant influence on foetal and placental measurements, number of foetuses had no effect. Transfer of healthy embryos to does on full or restricted rations before and/or after embryo transfer resulted in poor pregnancy rates and significant reduction in the survival of the transferred embryos irrespective of the timing of feed restriction.In order to investigate the mediation of the observed effects of undernutrition on reproduction, plasma samples were collected at frequent intervals during the luteal, follicular and preovulatory phases of the oestrous cycle and analysed for LH and FSH concentrations. There was no significant effect of undernutrition on basal LH and FSH profiles. Study of the preovulatory surge of gonadotrophins following sponge removal and injection of PGF2a revealed a decrease in the number of goats exhibiting a surge in LH and FSH concentrations, reduced magnitude of the surge and reduced incidence of ovulation in feed-restricted goats. Further investigation of pituitary function by injection of a large dose of GnRH demonstrated that the magnitude of the preovulatory surge of gonadotrophins was less in does on restricted feeding than in does on adequate nutrition.In order to investigate the mechanisms by which undernutrition reduced pregnancy rates, embryo survival and growth of foetuses, plasma progesterone concentrations were studied during the 10 days immediately after oestrus and between Days 51 and 60 of gestation. Plasma progesterone concentrations were not affected by undernutrition in the first 10 days after oestrus and mating but were increased in the period between 51 and 60 days of gestation. Investigation of follicular populations in dissected ovaries and luteal sections observed under light and electron transmission microscopes and assayed for LH and prolactin binding to cells of the CL indicated that undernutrition tended to reduce the population of small follicles but had no significant effects on the luteal cell morphology and on LH and prolactin binding of the corpus luteum.In conclusion, these results demonstrated that undernutrition delayed or suppressed the onset of oestrus, reduced ovulation and pregnancy rates and reduced foetal growth and survival in goats. The mechanisms through which these effects were mediated are complex and appear to involve both changes in the levels of gonadotrophin, in the sensitivity of target organs to gonadotrophins and most probably in other factors produced locally in the target organs, or elsewhere, that modulate the effects of gonadotrophins or the response of the target organs

Appraising the environmental friendliness of rice husk ash and oil palm shell as building materials from agricultural waste

The biggest challenge with concrete as the most expensive basic construction material made from cement and aggregate is that of creating a balance between economic constraints and environmental considerations with performance as the focal point. An appraisal of the environmental friendliness of Rice Husk Ash (RHA) and Oil Palm Shell (OPS) as emerging alternative building materials from agricultural waste to supplement and replace conventional cement and coarse aggregates in the production of concrete was conducted in order to guide their appropriate selection and utilisation. The embodied energy accrued during the production of RHA and OPS were assessed and compared with that of Ordinary Portland Cement (OPC) and crushed granite as coarse aggregate. Building Materials Green Feature Assessment criteria of Leadership in Energy and Environmental Design (LEED) was adopted in assessing the green features of both the materials. The appraisal concluded that the production processes and the behaviour of the materials at the construction and post construction stages were found not to have any significant negative impact on the environment in terms of pollution, resources depletion and ecological disturbance. The materials contain less embodied energy than the conventional materials i.e. OPC and coarse aggregate. There is however, the need to develop the necessary appropriate technologies for the local harnessing and utilisation of these emerging materials.Keywords: Rice-Husk-Ash, Oil-Palm-Shell, Green Features, Agricultural Wast