External Shocks, Institutional Quality, and Macroeconomic Performance in Nigeria

Abere, S. S.; Akinbobola, T. O.

doi:10.1177/2158244020919518

Cited by 18 publications

(14 citation statements)

References 58 publications

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“…Prior studies had stirred a series of controversies among economists as to the necessity of stabilization policies needed to guarantee stable performance in key macroeconomic variables such as the GDP, unemployment, exchange rate, interest rate inflation rate and so on (Abere & Akinbobola, 2020). The monetarists led by Freedman postulate that an economy is usually stable so advocating for further stabilization policies is clearly unnecessary.…”

Section: Literature Reviewmentioning

confidence: 99%

Empirical assessment of the impact of external reserves on economic growth in Nigeria

Adama

Ohwofasa

Onabote

2022

Investment Management and Financial Innovations

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In the last few decades, the continuous depreciation in the value of the naira occasioned by the dwindling external reserves affected the exchange rate resulting in several macroeconomic fundamentals in Nigeria. The objective of the study is to examine the impact of external reserves on economic growth in Nigeria. The study utilizes the descriptive approach for the trend analysis, while the autoregressive distributed lag (ARDL) model was relied upon in scrutinizing the contemporaneous dynamics for the unrestricted ECM. The data that were culled from several issues of the Central Bank of Nigeria’s annual report and statement of account covered the period 1986–2020. Descriptively, the study finds that economic growth rate and external reserves witnessed fluctuations with the latter being relatively more pronounced. Accordingly, the study finds that in the long run, all the explanatory variables were key determinants of economic growth in Nigeria. Specifically, economic growth is significantly and positively responsive to changes in external reserves by 0.22%, inflation rate by 0.08%, and a one period lag of GDP of 0.21% contrary to its negative response to changes in exchange rate of 0.10% in the short run. The paper recommended that the government may consider providing conducive environment for increased productivity, thereby increasing foreign reserves. Likewise, the situation that may encourage exchange rate misalignment should be avoided. Finally, inflation rate must be controlled within a single digit. AcknowledgmentThe support from Landmark University, Omu-Aran, Kwara State, Nigeria, to publish this article is appreciated.

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Section: Literature Reviewmentioning

confidence: 99%

Empirical assessment of the impact of external reserves on economic growth in Nigeria

Adama

Ohwofasa

Onabote

2022

Investment Management and Financial Innovations

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“…This study builds on the foregoing studies on the relationship between macroeconomic shocks and employment, with focus on the influences of labour market institutions. In general, previous studies (e.g., Calderon et al 2012;Bluhm et al, 2020, Abere & Akinbobola, 2020 generally concluded that the quality of domestic institutions is as potent as the resilience of macroeconomic fundamentals in absorbing external shocks to output in the system. The main question in this regard is whether the labour markets also possess internal institutional mechanisms to aid efficient adjustment to shocks.…”

Section: Brief Review Of Literaturementioning

confidence: 97%

Macroeconomic Shocks and Employment in sub-Sharan Africa: Do Labour Market Institutions Matter?

Adegboye

Alao-Owunna

Bank-Ola

2022

Zagreb International Review of Economics and Business

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The effects of macroeconomic shocks and labour market institutions on employment in sub-Saharan African countries are examined in this study. Using a sample of 27 SSA countries for the period 2007 to 2018, both linear and interactive relationships are investigated. The results show that labour market institutions (especially in terms of wage flexibility) dampen the effects of shocks on modern employment but amplify the effects of shocks on informal employment in the sampled SSA countries. There is also evidence that shocks themselves (especially those emanating from the external sector) do not matter for a huge proportion of employment changes in SSA countries. Rather, the direct effects of shocks on employment are more profound in the formal sector. The study therefore concludes that reforming the informal sector will help to ensure the effectiveness of labour market institutions in mitigating the negative impacts of external shocks on employment in SSA.

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“…The ECMt−1 is a one lag error correction term that accounts for the speed of adjustment to the long-run equilibrium. 1 These may be the change in the time series due to some unique economic happenings that may have occurred as a result of changes economic policies,…”

Section: Model Specificationmentioning

confidence: 99%

“…Prior to the investigation of the long-run and short-run nexus between external economic shocks and monetary policy instruments, the unit properties of the series were examined using the Zivot-Andrew (1992) unit root test with structural breaks. 1 This is due to Engle and Granger (1987) claim that time-series data sets are not stationary; therefore, we need to check the stationarity of the series to avoid the spurious results obtained from the application of OLS method.…”

Section: Unit Root Test With Structural Breaksmentioning

confidence: 99%

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External Economic Shocks and Monetary Policy Tools in Nigeria

Jato¹,

Ayaga²

2022

IJRISS

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The study investigated the effect of external economic shocks on monetary policy tools in Nigeria for a period of 1990 to 2020. External economic shocks were measured though their passthrough variables of exchange rate (EXR), foreign direct investment (FDI), external debt (ED), and trade openness (TO); while monetary policy tools were considered in terms of broad money supply (M2), monetary policy rate (MPR) and cash reserve ratio (CRR). The Zivot and Andrews test and the Bayer and Hanck combined cointegration tests were employed to to check for stationarity (with structural breaks) and cointegration among the variables. We then applied the autoregressive distributed lag (ARDL) test to determine the effect of the relationship between the independent variables and the dependent variable. The results of the structural indicated that there are structural breaks accounting for the existence of shocks, while the cointegration test showed that the variables are cointegrated. The ARDL test disclosed that external economic shocks (through EXR, FDI, ED, and TO) have significant effect on monetary policy variables. This study therefore recommends that the monetary authorities should safeguard the monetary operations in Nigeria from external economic mishaps that have spillover to the country by making allowance for the external economic shocks in setting these tools and putting in place mechanisms that can make these tools resilient and resistant to the shocks

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External Shocks, Institutional Quality, and Macroeconomic Performance in Nigeria

Cited by 18 publications

References 58 publications

Empirical assessment of the impact of external reserves on economic growth in Nigeria

Empirical assessment of the impact of external reserves on economic growth in Nigeria

Macroeconomic Shocks and Employment in sub-Sharan Africa: Do Labour Market Institutions Matter?

External Economic Shocks and Monetary Policy Tools in Nigeria

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