This study investigated the effect of insufficient currency in circulation on the rate of inflation and unemployment in Nigeria: The Buhari’s Administration Experience; using annual time-series data ranging from 1985 to 2020. In achieving this task, the study was disaggregated into two models: model 1 utilizing Vector Error Correction Model to analyse the relationship between fiscal variables (government total expenditure, government tax revenue, and export) and unemployment rate. It was revealed from the unit root of Augmented Dickey-Fuller test that none of the (fiscal) variables was stationary at level, but they were all stationary after 1st Differencing. This made it necessary for the study to apply Johansen co-integration test which the estimated result indicated 1 co-integration equation as evidenced by Trace statistic. This also, necessitated the application of Vector Error Correction Model (VECM), and it was observed that it took 61.71% annual speed of adjustment towards long-run equilibrium from short-run disequilibrium for unemployment rate to return to equilibrium after a shock to fiscal variables. The results further explained that government total expenditure, and government tax revenue, had negative and insignificant impact on unemployment rate respectively, thereby reducing unemployment rate. Similarly, the estimated result indicated that export had positive impact on unemployment thereby increasing unemployment rate within the period under study. Similarly, in analysing monetary variables (money supply, exchange rate and prime lending rate) in model 2: Phillip-Peron unit root test was conducted and it was confirmed that the variables were of mixed order of integration which necessitated the employment of ARDL technique. The ARDL bounds testing result revealed that a long-run relationship existed between monetary variables, and inflation. It was found, in the long-run, that money supply caused inflation rate to rise. More so, the result further revealed that present level of exchange rate decelerated inflation rate in both long-run and short-run. While, it was further observed that the one-year lag and two-year lag of exchange rate increased rate of inflation in both log-run and short-run respectively. The estimated result further revealed that the present level of prime lending rate minimised the rate of inflation in the long-run and short-run. Whereas, similar results were further confirmed in the one-year lag and two-year lag that prime lending rate reduced inflation rate in both log-run and short-run. As a result of these findings, with respect to model 1; the study recommended that government should maintain the level of its expenditure and tax revenue as this reduced unemployment rate, and it should lower trade costs so that demand for labour would increase in the export industry, this would make aggregate unemployment rate to reduce. With respect to model 2; it recommended the adoption of contractionary monetary policy that would minimise the amount of money supply that caused long-run effect on inflation in the system. Furthermore, there should be proper maintenance of fixed exchange rate policy that will make exchange rate regime overcome non-military forces of demand and supply in exchange rate market, this will help maintain low rate of inflation.
<p>Remittance flows into low-income and fragile states represent a lifeline that supports households as well as provides much-needed tax revenue (IMF - Sayeh & Ralp Chami; 2021).<strong> Purpose</strong>: on the basis of this record, the study sought to examine the dynamic modelling of the influence of diaspora cash remittance as measured by Personal Remittances Received (PRR); Exchange Rate (EXCHR); and Outward Remittances Flows (ORF) on macroeconomic stability in Nigeria as measured by Unemployment Rate (UNEMPR) and Gross Domestic Product per capita growth (GDPpcgr) using quarterly time-series data sourced from World Bank and World Development Indicators for the periods 2010Q1-2020Q4.<strong> Technique/Approach</strong>: the study was disintegrated to apply Engle-Granger two-step method of error correction model (ECM) together with Granger Causality test to analyse the causal effect of Personal Remittances Received; Exchange Rate; Outward Remittances Flows on Unemployment Rate, as well as, utilize vector autoregressive (VAR) technique to investigate the dynamic influence of Personal Remittances Received; Exchange Rate and Outward Remittances Flows on gross domestic product per capita growth.<strong> Findings</strong>: the result of Granger Causality test upheld the hypothesis of PRR does not involve Granger causality of UNEMPR and the hypothesis that UNEMPR does not involve Granger causality of PRR. However, unidirectional causality runs from EXCHR to UNEMPR; as well as, from ORF to UNEMPR. The result of the error correction model (ECM) demonstrated that personal remittances received and exchange rate have insignificant and significant short-term and long-term effects on increasing the rate of unemployment. Whereas, outward remittances flow significantly minimized the rate of unemployment. More so, the results of the vector autoregressive (VAR) technique portrayed that the past realization of GDPpcgr was associated with a significant increase of 0.84 percent in GDPpcgr. Whilst, the past realization of Personal Remittances Received and outward remittances flows were related to an insignificant increase in GDPpcgr respectively; also, the past realization of exchange rate retarded the GDPpcgr. Furthermore, variance decomposition forecast of 4-period horizon reported that 100 percent of deviation in GDPpcgr is explicated by GDPpcgr in the short-term, indicating that personal remittances received, exchange rate, and outward remittances flows had no strong exogenous influence on predicting GDPpcgr in the future. Whereas, in the long-term forecasted error in GDPpcgr produced about 97.57 percent; while, Personal Remittances Received, exchange rate and outward remittances flow had a weak influence on predicting GDPpcgr in the future.<strong> Concluding Remark</strong>: the study concluded that it is an imperative for policy makers to design more policy measures that will encourage, facilitate a smooth and efficient inflow of cash remittance from abroad into the country so as to stabilize the economy.</p><p> </p><p><strong>JEL: </strong>E01; E20; E24<strong></strong></p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu_01/0965/a.php" alt="Hit counter" /></p>
Purpose – Economic welfare is one of the macroeconomic goals every country seeks to achieve, be it developed, least-developed or developing one. Some countries with abundant natural resources still suffer from achieving this goal. Based on this reason, this study was carried out to empirically look into the relationship between petroleum resource as measured by oil rent, and official exchange rate, and economic welfare as measured by gross domestic product per capita of five-selected lower-middle-income of oil producing countries (i.e. Nigeria, Pakistan, Indonesia, Egypt and India), using annual time-series data sourced from World Bank for the periods 2010-2020. Design/methodology/approach – This objective was achieved with the utilization of static panel data method coupled with other linear models such as; Pooled OLS, Fixed effects, and Random effects models. Findings – The results of the findings of Pooled OLS revealed that petroleum resource as measured by oil rent and official exchange rate had significant bearings on economic welfare as measured by gross domestic product per capita by 103.3 per cent and 0.14 per cent respectively on the average. The result further displayed that fixed effects model was an appropriate model to explain the significant fixed effects oil rent and official exchange rate had on improving gross domestic product per capita, when choice was made between Pooled OLS and fixed effects model. More so, the result further demonstrated that random effects model was the best model to explain the random effects oil rent and official exchange rate had on contributing positively to the gross domestic product per capita, when choice was made between fixed effects and random effects models. Finally, Panel Diagnostic residual test results showed that the series were normally distributed, hence the presence of cross-section dependence was not found in the model. Conclusion/Policy Implication – The study concluded that for these five-oil producing countries to achieve their economic welfare, they must adopt mixed effects model as portrayed by the findings of this study for policy inference. As this is geared towards enabling these countries to achieve policies that are aimed at pegging their exchange rate to the value of dollars, and increasing the value of crude oil production, so as to improve their economic welfares.
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