AN EMPIRICAL ANALYSIS OF REAL EXCHANGE RATE MISALIGNMENT AND EXPORT DIVERSIFICATION IN NIGERIA
- Ibrahim Kekere Sule
- ( paper pages. 1 - 135 )
Abstract
This paper empirically explores the relationship between real exchange ratemisalignment and export diversification in Nigeria over the period 1995q1 to2014q4. The link between exchange rate misalignment and diversification ishighly debated and the empirical evidence highly debated. Based on this lack ofconsensus, this paper used two different measures of real exchange ratemisalignment (fundamental equilibrium exchange rate approach andbehavioural equilibrium exchange rate approach) to substantiate the robustnessof our conclusion. This paper seeks to contribute to the debate by using theToda-Yomamato causality and bound testing approach to cointegration. Theresult of the cointegration test shows evidence of long run relationship betweenour variables of interest. The findings shows that export diversification Granger-cause exchange rate misalignment, this suggest that export diversification effortcould reduce unwarranted movement in real exchange rate, thereby reducingexchange rate misalignment. The result also suggest that there is causalityrunning from misalignment (feer) to export diversification, which provide ampleevidence that deliberate effort to alter the equilibrium exchange rate(misalignment) could yield positive result in the export diversification effort. Thepolicy implication of the result is that export diversification is a viable option forNigeria to reduce unwarranted movement in exchange rate.
Citation
Ibrahim Kekere Sule.
2018.
"AN EMPIRICAL ANALYSIS OF REAL EXCHANGE RATE MISALIGNMENT AND EXPORT DIVERSIFICATION IN NIGERIA"
The Nigerian Journal of Economic and Social Studies,
60 (1): 1 - 135.
JEL Classification
O24, F10, 014
