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WHAT DETERMINES THE CHOICE OF THE EXCHANGE RATE REGIMES IN NIGERIA?

Tokunbo Osinubi (), Prof. Lloyd Ahamefule and Lloyd Amaghionyeodiwe ()

The IUP Journal of Applied Economics, 2005, vol. IV, issue 3, 60-78

Abstract: This paper examined the choice of the exchange rate regime in Nigeria using a time series approach. Both multinomial logit and simultaneous limited-independent models were estimated using time series data from 1960 to 2000. The study found that when domestic inflation was relatively high with respect to world inflation, a fixed exchange rate regime was preferred. This serves as an anchor. Also, domestic monetary disturbances appreciated the real exchange rate and favoured a more flexible arrangement, while in the presence of real shocks the balance of payments acted as a shock absorber and a fixed regime was more likely.

Date: 2005
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