EFFECT OF EXCHANGE RATE VOLATILITY ON ECONOMIC GROWTH IN NIGERIA (1986-2014)

John Adebayo Oloyede () and Oladapo Fapetu ()
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John Adebayo Oloyede: EKITI STATE UNIVERSITY, ADO EKITI, NIGERIA
Oladapo Fapetu: EKITI STATE UNIVERSITY, ADO EKITI, NIGERIA

No 7109608, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: This study evaluates the effect of exchange rate volatility on economic growth in Nigeria from 1986 to 2014. It determines the extent and manner to which economic growth responds to exchange rate volatility in Nigeria. The empirical analysis of this study is to determine the degree of volatility of real effective exchange rate using the Generalised Autoregressive Heteroskedasticity (GARCH) model and the Generalized Method of Moments is used to determine the effect of real exchange rate volatility on economic growth. The study finds that there is high volatility of real effective exchange rate. It also reveals that real effective exchange rate is negatively and significantly related to economic growth. This finding suggests that exchange rate volatility is harmful to the growth of the Nigerian economy. This study recommends that government should constantly seek to maintain a stable exchange rate, increase its expenditure, particularly capital expenditure and implement sustainable reforms to increase the depth of the financial sector.

Keywords: exchange rate; volatility; economic growth and GARCH (search for similar items in EconPapers)
JEL-codes: E44 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2018-06
New Economics Papers: this item is included in nep-mac
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Published in Proceedings of the Proceedings of the 9th Economics & Finance Conference, London, Jun 2018, pages 148-157

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:7109608

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