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Periodical article | Leiden University catalogue | WorldCat |
Title: | Impact of real exchange rate on trade balance in Nigeria |
Authors: | Igue, Nkenchor Neville Ogunleye, Toyin Segun |
Year: | 2014 |
Periodical: | African Development Review (ISSN 1467-8268) |
Volume: | 26 |
Issue: | 2 |
Pages: | 347-358 |
Language: | English |
Geographic term: | Nigeria |
Subjects: | exchange rates trade economic models |
External link: | https://doi.org/10.1111/1467-8268.12086 |
Abstract: | The study investigated whether the depreciation of exchange rate has a favourable impact on trade balance in Nigeria, based on the Marshall-Lerner (ML) condition. The Johansen method of cointegration and vector error correction methodology (VECM) was employed to investigate the existence of a long-run relationship between trade balance and the specified set of independent variables. The results confirm the satisfaction of the Marshall-Lerner condition in Nigeria, implying that depreciation of the exchange rate has a positive effect on trade balance in the long run. The study also established that a one per cent depreciation in the exchange rate would improve trade balance by 1.16 per cent. In the light of these findings, the study recommends a gradual depreciation of the exchange rate, which should be accompanied with export policy that encourages domestic production of non-oil products for exports. Bibliogr., sum. [Journal abstract] |