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Exchange Rate and External Reserves in Nigeria: A Threshold Cointegration Analysis
No full textThis paper models the long-run relationship between the Bureau De Change exchange rate and external reserves in Nigeria in a Threshold Vector Error Correction Model (TVECM) framework using daily data that spans from Jan 1, 2014 to Jul 31, 2015. Modeling BDC exchange rate and external reserves within this context can be motivated by the fact that the transition mechanism between the variables is controlled by the degree of BDC exchange rates premium which is within central bank of Nigeria’s policy oversight. The supLM test result indicates that there is a non-linear long-run relationship between the series, providing empirical support in favor of a TVECM specification. Thus, Cointegration occurs when the divergence between the two variables is above the threshold point estimate. Two regimes are implied by the model: the “usual” regime, which accounts for 93.1per cent of the observations and the “unusual” one, representing about 6.9 per cent of the observations of the sample. We also find that the error correction coefficients for both the bureau de change exchange rate and external reserves equations were not statistically significant at the 5 per cent significance level. While in the second regime, error correction coefficient for the external reserves equation was found to be statistically significant at 10 per cent. This implies that the adjustment mechanism between the two variables flow from external reserves to BDC exchange rate
The Causes of Persistent Inflation in Nigeria
No full textThis study sought to identify the traditional and institutional inflation variables responsible for inflation phenomenon and the magnitude of the contribution of the identified variables to the rise in general price level. Secondary data on key macroeconomic variables in the economy from 1974 to 2013 were used. The data collected were analysed using the Autoregressive Distributed Lag (ARDL) bounds test. The results showed that there existed a longrun co-movement among the variables. Also, the ordinary least squares estimate showed that Real Effective Exchange Rate, Lagged Consumer Price Index, Real Broad Money and Real Profits were statistically significant in influencing Consumer Price Index. The short-run relationship shows that 60% of disequilibrium errors from the previous year’s shock converge back to the long-run equilibrium in the current year. The study therefore concluded that inflation in Nigeria, during the studied period, was driven by the pass-through of import prices to domestic prices via markup pricing by firms. This was aided by domestic inflation persistence. It is therefore recommended that domestically produced products of good quality and adequate quantity must be substituted for imported ones and a monetary policy stance that does not easily deviate from the set monetary target should be adopted by the Nigerian monetary authorities if persistent inflation is to be curbed in the country
Fiscal Policy and Private Investment in Selected West African Countries
No full textThis study sets out to examine the nexus between fiscal policy and private investment in five selected West African countries using annual data from 1993 to 2014. Employing Fixed Effect Model for Panel data ordinary least square approach, the results showed the existence of a significant crowding in effect of government capital expenditure and tax revenue while non-tax revenue showed a crowding out effect. Recurrent expenditure and external debt also showed crowding out effects but these were insignificant. The accelerator effect of output growth was also found to be insignificant across the countries over the time period. The study called for concerted efforts from these countries to channel funds towards capital projects and also restructure the tax systems to prevent the negative effects of public debt on private investment
Dynamic Effects of Fiscal Policy on Output and Unemployment in Nigeria: An Econometric Investigation
No full textThis study investigates the effect of fiscal policy shocks on output and unemployment in Nigeria under the Keynesian framework by employing the Structural Vector Autoregression (SVAR) methodology to analyse annual series on the relevant variables for the period 1981-2015. Augmented Dickey Fuller (ADF) test for unit root result shows all variables to be integrated of order one and Johansen Cointegration test confirms the presence of long run association among the variables. Findings of the SVAR model shows shock in public expenditure as having a positive long- lasting effect on output. Revenue shock was found to exert a positive effect (lower than that of public expenditure shock) on output. However, the effect of revenue shock on unemployment was found to be negative but short-lived. The study suggested that government should restructure its spending pattern by allocating more to productive expenditure. In the same vein, it was suggested that government should harness its revenue potentials by expanding its revenue base via effective and efficient taxation system and also through diversification of its revenue base
2015 Statistical Bulletin: Domestic Production, Consumption and Prices
No full textStatistics of Gross Domestic Product and Expenditure at current Purchaser\u27s prices for the year 2015
Analysing Oil Price- Macroeconomic Volatility in Nigeria
No full textThis study provides analytical insight on modelling macroeconomic and oil price volatility in Nigeria. Mainly, the paper employed GARCH model and its variants (GARCH-M, EGARCH and TGARCH) with daily, monthly and quarterly data. The findings reveal that: all the macroeconomic variables considered (real gross domestic product, interest rate, exchange rate and oil price) are highly volatile; the asymmetric models (TGARCH and EGARCH) outperform the symmetric models (GARCH (1 1) and GARCH – M); and oil price is a major source of macroeconomic volatility in Nigeria. By implication, the Nigerian economy is vulnerable to both internal shocks (interest rate volatility, real GDP volatility) and external shocks (exchange rate volatility and oil price volatility). Therefore, it is concluded that more credence should be given to asymmetric models in dealing with macroeconomic volatility in Nigeria and oil price volatility should be considered as relevant variable in the analysis of macroeconomic fluctuations in Nigeria. The study recommends that, the Nigerian economy should be diversified by revamping other sectors such as the agricultural sector and the industrial sector in order to reduce the impact of oil price uncertainty on macroeconomic volatility
Treasury single account system and economic juche: the Nigerian experience.
No full textThis paper critically examines the nexus between the full implementation of the Treasury Single Account System (TSA) and Economic emancipation in Nigeria. Using data sourced from the Central Bank of Nigeria Statistical Bulletin, the study employed the use of explorative analysis. Findings emanating from the research indicate that the full implementation of TSA is capable of rejuvenating the drive for economic emancipation in Nigeria. Therefore, this paper has recommended policy reforms to serve as an operational framework for the full implementation of TSA, being one of the pre-conditions of optimal resource utilization and economic autarky
Financial soundness indicators and macroeconomic variables: an empirical investigation of the dynamic linkages
No full textThe Financial soundness indicators compiled for Nigeria within the context of IMFs Financial Sector Assessment Programme has been proven to be capable of pre-empting financial crisis. Analysts, however, considered it imperative to further explore the characteristics of the indicators, particularly their relationship with other macroeconomic variables to enhance the understanding of its dynamics so as to improve on its usefulness. This study, as a maiden attempt, applies Autoregressive Distributed Lag (ARDL) approach to investigate the dynamic linkages between the indicators and selected macroeconomic variables covering the period 2007 Q1 to 2015 Q4. The results indicate that macroeconomic events dictate the state of health of the Nigeria financial system. While changes in the level of economic activities inversely affect capital adequacy, it is directly related to asset quality and banks\u27 profitability. Asset quality deteriorates while inflation rises. Banks\u27 returns diminish and asset quality wanes as exchange rate depreciates. The study, therefore, suggests immediate deployment of FSIs as a monitoring instrument in conjunction with the existing micro-prudential tools while efforts should continue to improve the compilation process to enhance their accuracy
The place of collateral registry in credit delivery services
No full textMicro, small and medium enterprises (MSMEs) are the main engines of economic growth. The sub-sector constitutes on integral part of the economy, providing products and services to Nigeria\u27s teeming population, yet they are grossly underfunded. The huge financing gap, which characterized the MSMES, inhibits their development, thus having a telling effect on the economy
The role of the media in promoting real sector finance.
No full textThis paper would focus on the Role of the Media as a social institution, why it should promote real sector financing and how it can promote real sector financing. This is premised on the belief that previous papers have dwelt sufficiently on the issue of technicalities of real sector and aspects of financing