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The implications of exchange rate fluctuations on human welfare in Nigeria

Author

Listed:
  • Toriola, Anu Keshiro

    (Dept of Economics, Olabisi Onabanjo University, Ago-Iwoye, Nigeria)

  • Folami, Rahmon Abiodun

    (Dept of Banking and Finance, Olabisi Onabanjo University, Ago-Iwoye. Nigeria.)

  • Afolabi, Adewale Olakunle

    (Dept of Business Administration, Olabisi Onabanjo University, Ago-Iwoye, Nigeria.)

  • Ajayi, Felix Odunayo

    (Dept of Economics, Olabisi Onabanjo University, Ago-Iwoye, Nigeria.)

Abstract

In Nigeria, the sliding exchange rate has positioned the country amongst nations with the lowest standard of living. This study examined exchange rate fluctuations and human welfare changes in Nigeria. We specifically examined the trend of exchange rate and human welfare, investigated the effect of exchange rate fluctuations on human welfare indicators, and assessed the direction of causality between exchange rate and human welfare indicators in Nigeria. The study follows ex post facto research and data were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin and World Bank Development Index (WDI) between 1981 and 2017. The Ordinary Least Squares (OLS) and Ganger causality test were used in the actual estimation. The result showed that, interest rate exerts a significant positive effect on human welfare in Nigeria while exchange rate fluctuations and inflation exert an insignificant effect on human welfare in Nigeria. The Granger causality test established a unidirectional causality effect of human welfare on exchange rate fluctuations in Nigeria. The study recommended that government should discourage the importation of all products that can be produce locally and which the country has abundant resources to produce to boost the exchange rate.

Suggested Citation

  • Toriola, Anu Keshiro & Folami, Rahmon Abiodun & Afolabi, Adewale Olakunle & Ajayi, Felix Odunayo, 2020. "The implications of exchange rate fluctuations on human welfare in Nigeria," BizEcons Quarterly, Strides Educational Foundation, vol. 7, pages 13-25.
    • Handle: RePEc:ris:buecqu:0019
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    More about this item

    Keywords

    Exchange rate; Human welfare; Interest rate; Inflation;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D60 - Microeconomics - - Welfare Economics - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • N37 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Africa; Oceania

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