Vol 7, No 2 (2019)

Relative effects of exchange rate and interest rate on Nigeria’s economic growth

Wasiu Akintunde Yusuf, Abdurahman Isik, Nafisa Ibrahim Salisu


This study examined the relative effect of exchange rate and interest rate on economic growth in Nigeria, with the objective of determining their various implications on Nigeria’s economic growth. The study employed quarterly time-series data from 2000:Q1 to 2017:Q2.The Cointegration and Error Correction Methodology (ECM) were adopted. The result indicated that Exchange rate and Consumer Price Index had a significant effect on economic growth, while interest rate had an insignificant effect on economic growth in Nigeria. Therefore, the study recommended that government (regulatory authority) should endeavour to design exchange rate policies that can increase the growth prospects of the Nigerian economy. It also suggests that the government should maintain a low rate of inflation for that would increase investor’s confidence and participation as well as attract more capital flows into the economy. Finally, the study recommended that the issue of high lending rate with hidden transaction costs should be seriously monitored and addressed by the regulatory authority (CBN).

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Cointegration; Consumer Price Index; Error Correction; Exchange Rate; Unit Root.

Publication information

Volume 7, Issue 2
Year of Publication: 2019
ISSN: 1857 - 8721
Publisher: EDNOTERA

How to cite

Yusuf, W.A, Isik, A., Ibrahim Salisu, N.I.: Relative effects of exchange rate and interest rate on Nigeria’s economic growth. Journal of Applied Economics and Business, Vol 7, No. 2, 28-37. (2019)