A. C. Nkemakolam


The study investigates the efficacy of exchange rate reform on the economy of Nigeria with annual time series data from 1986 to 2013. There are mixed and conflicting conclusions indicating that the effect of exchange rate reforms on economic growth has not yet been resolved. Thus, there is the need to further examine the efficacy of exchange rate on economic growth of Nigeria. The present study improves on the previous ones by restricting the data to the period stated. Based on the theoretical issues discussed and the literature surveyed the model is built around the augmented Solow growth model whose operational framework is the Lobb-Douglas production function. Econometric evidence reveals stationarity of the variables at their first differences while the Johansen co-integration approach also confirms the presences of one co-integrating relationship at one percent and five percent levels of significance. The study further showed that exchange rate reforms have shown to have very high explanatory influence on Nigerian economy, which indicates that exchange rate reform is a veritable tool for enhancing and sustaining good economic growth of Nigeria. Based on the findings and conclusions, the study recommend that effective exchange rate devoid of speculation should continue to form part of the exchange rate policies in Nigeria and also effective implementation carried out by the monetary authorities through the central  bank of Nigeria to maintain balanced exchange rate policy to enhance and sustain economic growth of the country.


Exchange Rate, Banking Sector Reforms, Economic Growth, Monetary Policy, Nigeria.

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