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Relationship between Money Supply and Government Revenues in Nigeria
No full textThe insights on the long run relationship amongst money supply and government revenues are of significant importance for monetary-fiscal policy formulation in a developing country like Nigeria. Taking into account the vital importance of these two variables, we empirically analyzed the long-run relationships and dynamic interactions between the money supply (broad money M2) and government revenues in Nigeria using an Autoregressive Distributed Lag (ARDL) bounds testing approach. The study spans the period 1970 to 2010. From the results, it is evident that there is the existence of a long run relationship between money supply and revenues when money supply is made the dependent variable. When revenue was made the dependent variable, no evidence of a long run relationship was found. This indicates that changes in government revenues in the past have significantly affected the money supply as macroeconomic indicator in the country economy. The estimated coefficient of revenues has a positive and significant impact on money supply. A 1% increase in revenues leads to approximately 0.96% increase in the Money supply at long run. The sign of the short-run dynamic impacts of these variables are significant and have the correct sign. The error correction mechanism (ECM) is estimated as - 0.17 and -0.28%, this means that government revenue and money supply have significant short term effect
Foreign Trade-Economic Growth Nexus: Evidence from Nigeria
No full textThis study examines the nexus between foreign trade and economic growth in Nigeria using quarterly time-series data for 1981Q1 through 2010Q4. In order to fully account for feedbacks, a vector autoregressive model is utilized. The results show that there is a stable, long- run relationship between foreign trade and economic growth. The variance decomposition results show that the predominant sources of Nigeria economic growth variation are due largely to “own shocks” and foreign trade innovations. The study therefore recommends adoption of trade expansion policies as a means of accelerating economic growth in Nigeria
Oil price shocks and real exchange rate movement in Nigeria
No full textThis paper investigated the relationship between oil price and real exchange rate movement in Nigeria. Crude oil exports account for over 90 per cent of Nigeria\u27s foreign exchange earnings hence, the economy may be vulnerable to instability in international oil prices, which the country as a small open economy, cannot influence. Using monthly data covering the period 2000 to 2013, this study employs GARCH process to test the relationship between oil price and exchange rate volatility in Nigeria. The results of GARCH (1,1) and EGARCH (1,1) suggest the persistence of volatility between real oil prices and the real exchange rate. The Smooth Transition Regression (STR) results also show the expected reaction from the exchange rate following changes in oil prices. Thus, it concluded that oil price fluctuations lead exchange rates movement in Nigeria
A test of the Fisher Effect in Nigeria
No full textThis paper uses the state space model to investigate the dynamic relationship between real interest rate and inflation in Nigeria. The paper reveals varying degrees of effect across interest rate and time horizons
The Sensitivity of Nigerian Stock Exchange Sectors to Macroeconomic Risk Factors
No full textThis paper investigated the sensitivity of sectoral index returns on the Nigerian Stock Exchange to macroeconomic risk factors such as the spread between deposit and lending rates of banks, the slope of the yield curve, broad money supply, interest rates, exchange rates, inflation and the international price of oil. We found that the Banking, Food and Beverage, and Insurance sectors were sensitive to some macroeconomic risk factors but not to others. The Oil and Gas sector was sensitive to the slope of the yield curve only. This study estimated the elasticities of macroeconomic factors in the Nigerian Stock Exchange using the sectoral indices. It is also one of the few studies that has tested the Arbitrage Pricing Theory (APT) on distinct sectors of the Nigerian Stock Exchange. A number of policy implications on prudential guidelines, sectoral inventions, direction of investments and hedging strategies are indicated
An Autoregressive Distributed Lag (ARDL) approach to the oil consumption and growth nexus: Nigerian evidence
No full textThis study attempts to examine the relationship between oil consumption, carbon emission and economic growth in Nigeria covering the period 1980-2011. The study applied Dickey-Fuller Generalised Least Square (DF-GLS) unit root test and autoregressive distributed lag (ARDL) bound test approach to co-integration. The bond test results reveals a long-run equilibrium relationship among oil consumption, carbon emission and economic growth. The result also showed a positive and statistically significant impact of oil consumption on economic growth. The coefficient of error correction term in the ARDL model was statistically significant, indicating that the adjustment process by which long-run equilibrium is restored after a shock is very fast. In conclusion, oil consumption played an important role in the economic growth of Nigeria, thus efforts to conserve oil will have negative repercussions on economic growth
An overview and dynamics of financial market development in Nigeria and imperatives for exchange rate stability
No full textThe article discusses the important role money market plays in the economic development of any country which provides the platform for central banks to influence short-term interest rates
Financial system stability and the payment system.
No full textThis article reviews the relationship between payments system and financial stability. lt explores the risks within the payments system and how they impact on financial system stability. Emerging issues in the payments system were highlighted and implications for the financial system stability were examined. The article also proposes sets of payments system indicators that may be adopted within the financial system stability analysis and policy making
Nigeria\u27s monetary conditions index
No full textThe paper aims to construct a monetary conditions index (MCI) for Nigeria to aid the evaluation of the stance of monetary policy. Quarterly data for 91-day treasury bill rate (TBR), real exchange rate (RER), inflation rate (INF), real private sector credit (RCP), and real gross domestic product (RGDP), covering the period 2000Q1 to 2014Q1, were utilised. The period coincided with key reforms in the money and foreign exchange markets, culminating in the adoption of a new monetary policy framework in 2006. Following some econometric diagnostic tests, an aggregate demand function was estimated using the Johansen co-integration technique. The resultant long-run coefficients were applied to the deviations of the MCI component variables to derive the monetary conditions indices. The narrow and broad MCIs suggested a relatively tight monetary environment with the broad MCI being more volatile, compared with the narrow MCI due to the inclusion of the credit component, which reflects the continual swings in banking system liquidity. Our findings revealed that the exchange rate is a strong channel of monetary policy transmission mechanism in Nigeria, and thus very crucial in the conduct of monetary policy
Oil price shocks and real exchange rate movement in Nigeria
No full textThis paper investigated the relationship between oil price and real exchange rate movement in Nigeria. Crude oil exports account for over 90 per cent of Nigeria\u27s foreign exchange earnings hence, the economy may be vulnerable to instability in international oil prices, which the country as a small open economy, cannot influence. Using monthly data covering the period 2000 to 2013, this study employs GARCH process to test the relationship between oil price and exchange rate volatility in Nigeria. The result of GARCH (1, 1) and EGARCH (1, 1) suggest the persistence of volatility between real oil prices and the real exchange rate. The Smooth Transition Regression (STR) results also show the expected reaction from the exchange rate following changes in oil prices. Thus, we conclude that oil price fluctuations lead exchange roles movement in Nigeria