Financial Globalization and Exchange Rate uncertainty in Nigeria: A Band-Pass Filter Approach (Published)
Exchange rate uncertainty has been one of the many challenges implicated as the biggest developmental and growth obstacle facing Nigeria as a nation. This study estimates financial globalization, output growth and financial uncertainty nexus in Nigeria. The research is carried under the assumption that exchange rate uncertainties are deemed to impact on the volume of export and import trading activities. Thus, we adopted the Pairwise Granger Causality model to estimate the causality relationships among financial globalization, output growth and volatility in exchange rate using a Single Equation Englo-Granger approach. The best lag selection criteria were employed to choosing the best lag for this analysis. We provide a link between the short-run and the long-run effect of the model(s). This study found that they is a positive interaction between financial volatility (exchange rate uncertainty) and output volatility in Nigeria. It shows that as financial volatility such as exchange rate uncertainty is increasing, output volatility will also be increased in the same direction. The government and the monetary authorities should be more focused on the strengthening the exchange rate, since stable exchange rate improves the terms of trade, strengthen the local capacity and increases output growth. However, addressing the heightened risks, including financial and operational risks due to economic recession as well as due to the market reforms themselves have remained the challenges of globalization in Nigeria.
Keywords: Exchange Rate, Nigeria, band-pass filter approach, financial globalization
Migrant Remittances and Naira Price of the Dollar (Published)
This study investigated the possibility that the large amount of diaspora dollar remittance to the Nigeria economy could positively impact the naira price of the dollar (exchange) rate. Our methodology employed the Johansen cointegration test (JCT).The trace statistics result shows the null hypothesis that: there is no cointegration is rejected. Thus the trace test shows, there is at least one co-integrating vector. Furthermore, the output of the Max-Eigen statistics indicates that there is a strong evidence to reject the null hypothesis of no cointegration, implying there is long run relationship among the variables. Though diaspora remittance (logrem) has positive and significant long run effect on the domestic price of the naira (logexch) to the dollar, its coefficient (3.220574) is not sufficiently large when compared with oil price (24.56832) (logoilprice). We therefore conclude that though diaspora remittances influences the domestic naira price of the dollar, its impact on the domestic on the wider exchange rate market is insignificant.
Keywords: Exchange Rate, Foreign Reserves, Migration, diaspora remittance
Exchange Rate Reform and the Dynamics of Net-Export in Nigeria (Published)
In this paper, the short- and long-term empirical relationship between net-export and exchange rate variation in Nigeria was estimated using error correction model (ECM) and Fully-Modified least squares (FM-OLS) for the period, 1986-2017. The impacts of degree of openness and tariff on net-export were equally examined over the study period. Prior to the actual estimation of the model, the series were subjected to unit root test using Phillips-Perron method and the results that they are all first difference stationary. Additionally, the cointegration test result revealed that the linear combinations of the of the nonstationary series leads to long run relationship amongst them. The parsimonious ECM shows that the variables jointly exert significant impact on net-export in the short run. It was also observed from the error correction coefficient that any short run disequilibrium in the system can be reconciled at 53.47 percent to achieve long run equilibrium position. The estimated cointegrating regression model shows that nominal effective exchange rate exerts significant positive impact on net-export in the long run. Overall, the F-test result for joint significant of the series reveal that the all the variables are collectively important in influencing changes in net-export. On the basis of the findings, it is recommended that policy makers should ensure that exchange rate policy prevalent in the Nigeria economy is tailored towards making exports more competitive in the international market in order to boost net-export growth and maintain stability in the domestic economy.
Keywords: Degree of Openness, ECM and FM-OLS, Exchange Rate, Net-export, Tariff
Richard Cantillon’s Ideologies and its Implications for Economic Development in Nigeria (Published)
This paper examines and ascertains how the contributions of Richard Cantillon have been relevant to the development of the Nigerian economy. In doing this, the economic thoughts of Richard Cantillon were critically examined in order to see how these issues raised have been affecting the Nigerian economy. Political economy and descriptive approaches were used to x-ray the relevance of Richard Cantillon’s contributions to Nigeria’s development. His contributions among others include: the nature of wealth, social and economic organization of people, wages of labour, theory of values, population problems and the use of gold and silver, barter, prices, circulation of money, interest, foreign trade, foreign exchange and banking and credit. The findings of the study revealed that these contributions are of great relevance to economic development in generally, but have not specifically contributed to the development of Nigerian economy. This is seen in the areas of low per capita income, negative attitude to work, inevitable population problems, persistent increase in prices, high lending interest rate, unfavourable terms of trade, incessant and diversion of public funds into private business rather than the real economy, and without doubt Nigeria has no place in foreign trade. Based on the foregoing, it was concluded that all these ugly trends accounted for the reason why economic development is not at sight in Nigeria. Thus, it was recommended that the monetary authorities should initiate sound monetary policies. Also, these monetary policies should be complemented with effective fiscal policies in order to put the Nigerian economy back to path of economic growth and development.
Keywords: Economic Development, Exchange Rate, Fiscal Policies, Foreign Trade, Interest Rate, Monetary Policies, Money Supply, Wages of Labour