Exchange Rate Fluctuation and Economic Growth Nexus in Nigeria: An application of Autoregressive and Distributed Lag (ARDL) model

Abstract

The study investigates the relationship between exchange rate fluctuation and economic growth in Nigeria using autoregressive and distributed lag model covering periods from 1960-2021. Finding reveals that exchange rate has a negative relationship with economic growth in both the short and long run. The study recommends that government should induce the foreign
exchange rate by enacting positive economic reforms that will minimize the unfavorable effect of fluctuation of the exchange rate on the Nigerian economy with respect to trade flows and economic growth. Also, there is need for imposition of stern tariffs in other to discourage the over dependence of import goods and services. Lastly, an adequate and appropriate environment and infrastructural facility need to be in place so as to attract foreign investors. This will thereby lead to job creation and in the long-run, improve the people’s standard of
living.