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- Title
EXTERNAL RESERVE AND EXCHANGE RATE IN NIGERIA: A SIMPLE GRANGER CAUSALITY TEST APPROACH.
- Authors
IJOKOH, SOLOMON ULOHO
- Abstract
A plethora of studies have investigated the impact of External Reserve on Exchange rate in Nigeria but the causal link between these variables have received less attention. It is on this basis that this study investigates the causal link between external reserve and exchange rate with an implication for monetary policy direction in Nigeria. Annual time series data from Central Bank of Nigeria (CBN) and World Development Indicators (WDI) were used in this study as we applied different econometrics analytical techniques such as the Unit root test, Johansen Cointegration test and the Granger causality test in our empirical investigation. The result from our study suggests that there exist a long run and unidirectional relationship between external reserve and exchange rate. External reserve was found to granger cause exchange rate. We therefore recommend the formulation and implementation of key policies that will aid in augmenting external reserve and proper implementation of a managed floating exchange rate regime.
- Subjects
NIGERIA; CENTRAL Bank of Nigeria; GRANGER causality test; FOREIGN exchange rates; MONETARY policy; TIME series analysis
- Publication
Journal of Academic Research in Economics, 2024, Vol 16, Issue 1, p155
- ISSN
2066-0855
- Publication type
Article