The Effect of Exchange Rate on Gross Domestic Product (GDP) on the Nigerian Economy using ARDL-ECM approach

Authors

  • Mohammed Hassan Ramat

    Ahmadu Bello University, Zaria, Kaduna State, Nigeria
    Author
    https://orcid.org/0000-0001-5881-3483

  • Yahaya Zakari

    Ahmadu Bello University, Zaria, Kaduna State, Nigeria
    Author

  • Mohammed Usman

    Ahmadu Bello University, Zaria, Kaduna State, Nigeria
    Author

  • Isah Muhammad

    Binyaminu Usman Polytechnic, Hadejia, Jigawa State, Nigeria
    Author

  • Jamilu Yunusa Falgore

    Ahmadu Bello University, Zaria, Kaduna State, Nigeria
    Author
    https://orcid.org/0000-0003-4762-1560

  • Hussaini Garba Dikko

    Ahmadu Bello University, Zaria, Kaduna State, Nigeria
    Author

Keywords:

Auto-regressive distributed lag, error correction model, official exchange rate, gross domestic product

Abstract

 M.H. Ramat, Y. Zakari*, M. Usman, I. Muhammad, J.Y. Falgore and H. G. Dikko

This paper investigates the effect of the exchange rate on the gross domestic product (GDP) on the Nigerian economy from 1981-2021. The data was obtained from the CBN annual statistical bulletin. The application of the ARDL-ECM procedure for the analysis indicated that GDP in Nigeria is not responsive to exchange rate movement on the long run. A short run relationship was found to exist between GDP and exchange rate which is statistically significant. The Error correction mechanism (ECM) was found to have a short run dis-equilibrium adjustment of about 68.75% for correcting any deviation from the long run equilibrium. The model did not have a serial correlation but was found to be stable, which indicated that the result maybe appropriate for policy stipulation. Findings from the data obtained confirmed that policy makers should not completely rely on exchange rate manipulation as an instrument to boost the economy but should consider other economic variables to strengthen the GDP of the economy.

Author Biographies

  • Mohammed Hassan Ramat, Ahmadu Bello University, Zaria, Kaduna State, Nigeria

    Department of Statistics

  • Yahaya Zakari, Ahmadu Bello University, Zaria, Kaduna State, Nigeria

    Department of Statistics

  • Mohammed Usman, Ahmadu Bello University, Zaria, Kaduna State, Nigeria

    Department Of Statistics

  • Isah Muhammad, Binyaminu Usman Polytechnic, Hadejia, Jigawa State, Nigeria

    Department of Statistics

  • Jamilu Yunusa Falgore, Ahmadu Bello University, Zaria, Kaduna State, Nigeria

    Department Of Statistics

  • Hussaini Garba Dikko, Ahmadu Bello University, Zaria, Kaduna State, Nigeria

    Department Of Statistics

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Published

2022-05-27

Issue

Vol. 8 No. 2 (2022): VOLUME 8 ISSUE 2

Section

Articles