Econometric Analysis of Exchange Rate and Export Performance in a Developing Economy

Aro-Gordon, Stephen

doi:10.18488/journal.aefr/2017.7.4/102.4.334.348

Cited by 7 publications

(2 citation statements)

References 10 publications

(10 reference statements)

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“…Thus, the negative agriculture export impact of exchange rate contradicts those of similar studies like Mishkin (1995), Boltho (1996), Kollmann (2005), Ireland (2010), and Yildirim and Ivrendi (2016), which all posited that the currency depreciation improves local export. However, it is at variance with those of Arize (1998) and Aro-Gordon (2017), which affirmed contrary negative impacts on local exports.…”

Section: Discussionmentioning

confidence: 88%

Do fluctuations in exchange rate hinder non-oil export? An analysis of agriculture and manufacturing in Nigeria

2021

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This study examines the effect of exchange rate fluctuation on non-oil export by focusing on both manufactured exports and agriculture exports in Nigeria between 1970 and 2019. The study employs the vector error correction framework, the impulse response and variance decomposition analyses to analyse data on agriculture exports, manufacturing exports, exchange rate, interest rate, and inflation rate. Findings suggest that long run relationship exists among the variables. The vector error correction analysis reveals that exchange rate depreciation positively impacts agriculture exports but negatively impacts manufacturing exports in Nigeria. However, both the impulse response and variance decomposition analyses confirm that exchange rate fluctuation has a higher significance on manufacturing exports than agriculture exports by accounting for the largest forecast error variance in manufacturing exports than in agriculture exports over the forecast horizon. We conclude that fluctuations in exchange rate significantly impact the non-oil exports in Nigeria. Hence, to enhance the non-oil exports, government could consider enhancing the local capacity to produce for exports by reducing tariffs for manufactured inputs. They can also set up modular mechanised farms for agriculture graduates and farmers to boost agriculture exports and stabilize the exchange rate.

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Section: Discussionmentioning

confidence: 88%

Do fluctuations in exchange rate hinder non-oil export? An analysis of agriculture and manufacturing in Nigeria

2021

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“…At the same time, devaluation represents a deliberate reduction in a currency's value; depreciation results from natural market forces of demand and supply for foreign exchange. Depreciation is typically associated with a floating exchange rate regime, which can be particularly challenging for countries that are more productive in exporting finished goods, unlike devaluation (Engle, 2003;Devereaux et al, 2003;Tella, 2016;and Aro-Gordon, 2017).…”

Section: Introductionmentioning

confidence: 99%

Shifting the paradigm for securing efficient management of exchange rate in Nigeria: A GARCH and BEKK-MGARCH analysis

Subair

2023

JES

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The influence of foreign exchange on all spheres of any economy is germane to determining its extent of development. Most developing countries have been subjected to managing the integrity of the exchange rate arising from their disadvantageous position in world trade. Nigeria is not an exemption either; this is due to its constant interventions in the foreign exchange market from time to time and by the policy of the existing government in power. However, the interventionist policy framework has been more harmful to Naira as the currency depreciates unabatedly. The pertinent question is whether monetary policy should be the only approach to effective exchange rate management or be combined with fiscal and income policies. Irrespective of the policy choice, the aim, target, and instrument must be complementary without unnecessary disruptions midway, as usually experienced in Nigeria. These inconsistencies have come to bear enormously on the country's exchange rate management. Rather than focusing on the impact of exchange rate volatility on industrial development that could warrant foreign exchange inflows, this paper considers industrialization as an approach to effectively managing exchange rates in Nigeria. This analysis employs a univariate GARCH and BEKK-MGARCH model, using high-frequency monthly time series data from 2000 to 2019, to examine the volatility transmission between the foreign exchange market and the industrial sector. The model estimation uses the Conditional Maximum Likelihood Technique (CMLT). It was discovered that industrial development positively influenced the official market exchange rate compared to the parallel market exchange rate, reducing its volatility. The study thus suggests the vigorous pursuit of foreign exchange earnings and usage policy by earning entities, floating Diaspora bonds, enhancing and encouraging remittances and repatriation of illicit financial outflows to enhance industrialization. This will discourage arbitraging, increasing foreign exchange inflows and stabilizing the economy.

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E: Policy, Law and Regulation

2017

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Econometric Analysis of Exchange Rate and Export Performance in a Developing Economy

Cited by 7 publications

References 10 publications

Do fluctuations in exchange rate hinder non-oil export? An analysis of agriculture and manufacturing in Nigeria

Do fluctuations in exchange rate hinder non-oil export? An analysis of agriculture and manufacturing in Nigeria

Shifting the paradigm for securing efficient management of exchange rate in Nigeria: A GARCH and BEKK-MGARCH analysis

E: Policy, Law and Regulation

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