Effect of Currency Devaluation on Macro - Economic Variables: The Nigerian Experience
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Date
2016
Authors
Amah, P.N
Journal Title
Journal ISSN
Volume Title
Publisher
University of Lagos Press, Akoka
Abstract
This paper investigates past exchange rate management regimes adopted by the Central Bank of Nigeria since 1959, and attempts to find out whether devaluation can be used to restore equilibrium and significantly achieve national economic growth and development. The Multiple Least Squares method was used to estimate coefficients of the identified relationships following one period lag and autoregressive models formulated to correct errors detected in the data of macroeconomic variables. Significantly, a negative and statistically significant relationship was found between exchange rate and non-oil exports. Devaluation had a negative cause-effect relationship with inflation. It was also negative and significant with national output in the one-year lag specification. Accordingly the paper recommends that devaluation should not be relied upon as a primary tool for restoration of macroeconomic balance. Instead, a system of managed float supported with strong trade and exchange controls should be used. Complementary fiscal policy measures should also be adopted.
Description
Journal Articles
Keywords
Balance of payment equilibrium , Non-oil exports , Gross domestic product , Exchange rate , Devaluation , Research Subject Categories::SOCIAL SCIENCES::Business and economics
Citation
Amah, P.N (2016). Effect of Currency Devaluation on Macro - Economic Variables: The Nigerian Experience.Unilag Journal of Humanities, Vol.4(1), 96-112p.