IMPACT OF PERSISTENT DEPRECIATION OF NAIRA CURRENCY ON THE GROWTH OF NIGERIAN ECONOMY (2019-2021)
Abstract
Persistent depreciation of naira currency policy is an important tool in macroeconomic management therefore, this paper examined the effects of persistent depreciation of naira currency on the economic growth of Nigeria with additions of 3 others objectives which also assessed the impact of persistent depreciation of naira currency on economic growth and development of Nigeria; the long-run relationship between persistent depreciation of naira currency and the direction of causality between Gross Domestic Products (GDP), persistent depreciation of naira currency, inflation depreciation of and interest depreciation and The research design adopted in this paper were ex-post facto design (the use of secondary data). Data used in this study were observational secondary time series data extracted from the Central Bank of Nigeria’s (CBN’s) statistical bulletin and annual reports that accounts for the 2019-2021 periods. The Augmented Dicker-Fuller (ADF) result indicated that interest rate (INTR) was stationary at levels while GDP, exchange rate (EXCH) and inflation rate(INFL) were found to be stationary at first difference at 5 per cent level of significance with t-statistic value of -5.000498, -6.682082 and -2.659911 with probability values of 0.0004, 0.0000 and 0.0032 respectively, while INTR was stationary at levels with t-statistic value of -3.205035 and probability value of 0.0002. The null hypothesis of the ARDL bound test is that there is no long run relationship (cointegration) among the variables. Given that the computed F-statistic (9.5284333) of the autoregressive distributed lag (ARDL) bounds test is greater than the upper critical value (3.2) at 5 per cent level of significance, the null hypothesis is rejected. This implies that there is a long run relationship between persistent depreciation of naira currency and economic growth. Sequel to the finding of this study, I specifically made the following policy recommendations to the maintenance of stable persistent depreciation of naira currency and in the case of import, tariffs can be placed to be a very high on imported goods thereby discouraging imports.
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