Exchange Rate Fluctuation and Inflation Nexus in Nigeria: The Case of Recent Recession

Ismaila Akanni Yusuf, Mohammed Bashir Salaudeen and Isaac Azubuike Ogbuji

Journal of Economic Impact, 2022, vol. 4, issue 1, 81-87

Abstract: The erratic performance of the Nigerian economy has generated theoretical and empirical debate in the literature. For instance, while some scholars have posited that inflation and currency depreciation positively influence a country’s economy, others believe the contrary. This leads to the interaction of both the exchange and inflation rates to arrive at an innovative conclusion. Hence, this study examines the effects of both indicators and their interactive effect of the country’s performance in the regulation era between 1986 to 2019, using the autoregressive distributed lag estimation technique. The empirical findings reveal that the interaction of inflation and exchange rate has a negative impact on the economy in the short run, but it is positive in the long run. Thus, the monetary authority should proactively control the foreign exchange rate movement to curtail the recent surge in inflation and boost the performance of the country’s economy.

Keywords: Exchange rate; Inflation rate; Economic performance; Nigeria (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:adx:journl:v:4:y:2022:i:1:p:81-87

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