AN EMPIRICAL ANALYSIS OF THE NIGERIAN DILEMMA IN THE WAR OF CURRENCY DEPRECIATION FROM 1986 TO 2014
Abomaye-Nimenibo W.A.S.
Department of Economics,
Faculty of Management & Social Sciences
Obong University, Obong Ntak, Akwa – Ibom State, Nigeria.
Email: wasanim2006@yahoo.com
Abstract: The research paper critically investigated the effect of currency depreciation on the Nigerian economy within the period 1986-2013, employing the Augmented Dickey-Fuller unit root test, the co-integration test which indicated a long-run relationship between the dependent and independent variables with a temporary disequilibrium among the variables in the short-run. The benchmark results indicated that exchange rates do play a vital role in determining the long-run effectiveness of economic growth in Nigeria. The results further stressed that exchange rate depreciation, if regulated by market forces i.e. the interplay of market mechanisms would improve the level of Gross Domestic Product in the country. The result also further stressed that the long-run effect of exchange rate depreciation on GDP is enhanced if accompanied by contractionary fiscal and monetary policies.