Exchange Rate and Macroeconomic Aggregates in Nigeria

Journal of Economics and Sustainable Development www. iiste. org ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol. 3, No. 2, 2012 93 Exchange Rate and Macroeconomic Aggregates in Nigeria Dada Eme A. Department of Economics, University of Ibadan, Nigeria... More

Journal of Economics and Sustainable Development www. iiste. org ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol. 3, No. 2, 2012 93 Exchange Rate and Macroeconomic Aggregates in Nigeria Dada Eme A. Department of Economics, University of Ibadan, Nigeria dadaeme@gmail. com Oyeranti Olugboyega A. Dept. of Economics, University of Ibadan, Nigeria oyert@yahoo. com Abstract This study analyses the impact of exchange rate on macroeconomic aggregates in Nigeria. Based on the annual time series data for the period 1970 to 2009, the research examines the possible direct and indirect relationship between the real exchange rates and GDP growth. The relationship is derived in two ways using a simultaneous equations model within a fully specified (but small) macroeconomic model, and a vector-autoregressive model. The estimation results show that there is no evidence of a strong direct relationship between changes in the exchange rate and GDP growth. Rather, Nigeria’s economic growth has be Less