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Econometric Analysis of the Nexus of Exchange Rate Deregulation and Agricultural Share of Gross Domestic Product in Nigeria

Author

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  • Oyinbo, O.
  • Rekwot, G. Z.

Abstract

This study examined the relationship between exchange rate deregulation and the agricultural share of gross domestic product in Nigeria from an econometric perspective using time series data. The data were analysed using augmented dickey fuller unit root test, unrestricted vector autoregression and pairwise granger causality. The results of the data analysis revealed the existence of unidirectional causality from exchange rate to agricultural share of gross domestic production in Nigeria and this implies that market driven exchange rate policy has been significant in influencing the trend in agricultural share of gross domestic production in Nigeria. However, it is recommended that the monetary authority of Nigeria should closely monitor the movement of the market driven exchange rate so that exchange rate deregulation does not become counterproductive through unhealthy price distortions on agricultural production, international trade and foreign direct investment in the agricultural sector of Nigeria’s economy.

Suggested Citation

  • Oyinbo, O. & Rekwot, G. Z., 2014. "Econometric Analysis of the Nexus of Exchange Rate Deregulation and Agricultural Share of Gross Domestic Product in Nigeria," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(1), March.
  • Handle: RePEc:ags:aolpei:167098
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    References listed on IDEAS

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    1. J.W. Nevile & Peter Kriesler & Geoff Harcourt, 2011. "Exchange Rate Management in an Era of Global Financial Crises with special reference to Australia," Discussion Papers 2012-05, School of Economics, The University of New South Wales.
    2. Obstfeld, Maurice, 2002. "Exchange Rates and Adjustment: Perspectives from the New Open- Economy Macroeconomics," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 20(S1), pages 23-46, December.
    3. Aghion, Philippe & Bacchetta, Philippe & Rancière, Romain & Rogoff, Kenneth, 2009. "Exchange rate volatility and productivity growth: The role of financial development," Journal of Monetary Economics, Elsevier, vol. 56(4), pages 494-513, May.
    4. Petreski, Marjan, 2009. "Exchange-rate regime and economic growth: a review of the theoretical and empirical literature," Economics Discussion Papers 2009-31, Kiel Institute for the World Economy (IfW).
    5. Paulo Gala, 2008. "Real exchange rate levels and economic development: theoretical analysis and econometric evidence," Cambridge Journal of Economics, Oxford University Press, vol. 32(2), pages 273-288, March.
    6. Ghura, Dhaneshwar & Grennes, Thomas J., 1993. "The real exchange rate and macroeconomic performance in Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 42(1), pages 155-174, October.
    7. Jumah, Adusei & Kunst, Robert M., 1999. "The Effects of Dollar/Sterling Exchange Rate Volatility on Futures Markets for Coffee and Cocoa," Economics Series 73, Institute for Advanced Studies.
    8. Guedae Cho & Ian M. Sheldon & Steve McCorriston, 2002. "Exchange Rate Uncertainty and Agricultural Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 931-942.
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