Real Exchange Rate Distortions and External Balance Position of Nigeria: Issues and Policy Options
This research paper examines the position of the observed real exchange rate (RER) in relation to its unobservable equilibrium position, estimating the time path of the latter using the single equation procedure. It found out that over the sample period, real exchange rate misalignment (measured as the deviation of the actual from the estimated equilibrium path) was irregular but persistent. Misalignment was also found to be higher during the period of deregulation than during that of regulation. After generating the misalignment and volatility of the RER, this work proceeded to ascertain the influence of these distortions on the balance of payment – a gauge of the external balance position of the country. It was then observed that real exchange rate distortions (misalignment and volatility) hurt both the trade balance and the capital account. However, while RER misalignment is critical to the two external sector variables, volatility matters more to the flow of capital. The paper therefore recommends a more realistic management of investment environment (with an eye on stability), public sector expenditure and other fundamentals as a necessary complement to nominal devaluations in the search for stronger external positioning.
Volume (Year): 5 (2002)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.jadafea.com/|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:afe:journl:v:5:y:2002:i:2:p:20-47. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mwangi wa Githinji)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.