Abstract
This study investigates the impact of the persistent exchange rate volatility on trade flows in Nigeria, for the period of 1970-2021, using secondary data obtained from various sources. Data were analyzed using descriptive tools like tables, graphs and other econometric methods, such as the Two Stage Least Squares method. Result of the trade flows equation indicates that though all the explanatory variables conformed to theoretical a priori expectation, none was statistically significant at 5% level. It confirms a negative and insignificant impact of exchange rate volatility on trade flows in Nigeria. Further findings from the EGARCH model indicate that exchange rate volatility in Nigeria has been high, persistent and asymmetric with positive leverage and high clustering effect over the study period. The study recommends pragmatic economic diversification away from oil to the tradable lagging sectors of agriculture, manufacturing and the services sector, in order to stabilize the long run value of the exchange rate. Also, appropriate monetary-fiscal policy measures should be adopted in order to reduce exchange rate volatility, particularly the supply-sided approach. Nigeria should also increasingly open up her economy to foreign trade in order to harness foreign direct investment inflow into the economy.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: International Journal of Scientific Research in Educational Studies & Social Development
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
