Relationship between Exchange Rate and Gross Domestic Product in Nigeria ARDL Approach
Idris Muhammad Idris, Baba Ali Ashemi and MohammedMusa

This paper empirically investigates the relationship between exchange rate and the Gross Domestic Product (GDP) in Nigeria from 1981 to 2017. The annual data was obtained from CBN statistical bulletin. Using the Auto-Regressive Distributed Lag (ARDL) co-integration procedure. The result indicates that GDP in Nigeria is not responsive to official exchange rate movement. A long run relationship was found to exist between GDP and official exchange rate, but not statistically significant. The Error Correction Mechanism (ECM) estimate was rightly signed but was found to have a short-run disequilibrium adjustment of less than 2% for correcting any deviation from long-run equilibrium. The models are found not to have serial correlation and also found to be stable meaning that the result is appropriate for policy consideration. It is therefore suggested that policy makers should not totally rely on exchange rate manipulation as an instrument to boost the economy, but should consider other economic variables to strengthen the GDP.

Full Text: PDF     DOI: 10.15640/jeds.v7n3a6