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Impact Of Exchange Rate Volatility On Economic Growth: 1981-2019 (Ardl Model)

Author

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  • Taiwo-Agosu BOLARINWA

    (University of Abuja, Abuja, Nigeria)

  • Elssy-Chidinma ANOCHIRIONYE

    (University of Abuja, Abuja, Nigeria)

Abstract

This research investigates the relationship between exchange rates and economic growth in Nigeria during the period from 1981 to 2019. The research conducted an analysis of Nigerian data using the Ordinary Least Square (OLS) technique and identified that Exchange Rates have a favourable impact on Economic Growth. This paper affirmed the regression's validity with stationary residuals and found no long-term equilibrium using Bound Cointegration. The ARDL modelling revealed short-term connections between exchange rates and economic growth. Positive correlations were observed between exchange rates, GDP per capita growth, interest rates, and total exports, while negative relationships were noted with inflation and total imports, highlighting the importance of exchange rate stability in sustaining economic growth. This research provides a novel viewpoint on the connection between exchange rates and economic growth in Nigeria during the period from 1981 to 2019. It uncovers that more than 98% of the fluctuations in exchange rates can be accounted for by the included variables. The noteworthy discovery of the absence of a long-term equilibrium relationship within the specified time frame sets this study apart. Furthermore, it underscores the crucial role of exchange rate stability in promoting enduring economic growth, emphasising the necessity for well-designed policies that consider the intricate economic landscape.

Suggested Citation

  • Taiwo-Agosu BOLARINWA & Elssy-Chidinma ANOCHIRIONYE, 2024. "Impact Of Exchange Rate Volatility On Economic Growth: 1981-2019 (Ardl Model)," APPLIED RESEARCH IN ADMINISTRATIVE SCIENCES, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 5(1), pages 41-52, April.
    • Handle: RePEc:rom:arasju:v:5:y:2024:i:1:p:41-52
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    References listed on IDEAS

    as
    1. Lawrence Olisaemeka UFOEZE, 2018. "Effect Of Foreign Exchange Rate Fluctuations On Nigerian Economy," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 9(1), pages 105-122.
    2. Achouak Barguellil & Ousama Ben-Salha & Mourad Zmami, 2018. "Exchange Rate Volatility and Economic Growth," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 33(2), pages 1302-1336.
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