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THE IMPACT OF EXCHANGE RATE VARIATIONS ON AGGREGATE DEMAND IN NIGERA (1979 -2013)

ABSTRACT

The study is a critical Evaluation of the impact of Exchange rate variation on Aggregate Demand in Nigeria. These study made use of the ordinary least square (OLS) regression technique in analyzing the impact of Exchange Rate Variation On Aggregate Demand in Nigeria. There are also other variables that determine the impact of Exchange Rate Variations on Aggregate Demand in Nigeria: 1979 -2008. Findings from the paper show that  all the variables included in the models contributes in explaining the role of exchange rate on aggregate demand in Nigeria. These massive contributions of these variables may strongly depend on the circumstances in Nigerian economic environment. The starting point in reclaiming and re-inventing project in Nigeria is to squarely admit that oil and the manner we have designed to utilize it have constituted a stumbling block in Nigeria’s progress. Accordingly, there is need to pay specific attention to the contest of action and the production relations in the various sections of the economy. 

 

 

 

 

 

TABLE OF CONTENTS

Title Page =        =       =       =       =       =       =       =       =       i

Approval Page   =       =       =       =       =       =       =       =       ii

Dedication                    =       =       =       =       =       =       =       =       iii

Acknowledgement      =       =       =       =       =       =       =       iv

Abstract     =       =       =       =       =       =       =       =       =       v

Table of Content                    =       =       =       =       =       =       =       vi

 

CHAPTER ONE

Introduction        =       =       =       =       =       =       =       =       1

1.1     Background of the Study      =       =       =       =       =       1       

1.2     Statement of Problems          =       =       =       =       =       =       5

1.3     Objective of the Study=       =       =       =       =       =       6

1.4     Statements of Hypothesis     =       =       =       =       =       7

1.5     Scope and Limitations of the Study        =       =       =       7

1.6     Significance of the Study      =       =       =       =       =       8

CHAPTER TWO: LITERATURE  REVIEW

2.1     Review of Theoretical Literature   =       =       =       =       10

2.2     Exchange ate Determination Models     =       =       =       11

2.2.1  Flexible Price Monetary Model     =       =       =       =       12     

2.2.2  Sticky Price Monetary Model        =       =       =       =       13

2.2.3  Equilibrium Model and Liquidity Model                 =       =       14

2.2.4  Portfolio Balance Model       =       =       =       =       =       15

2.3     An Overview of Exchange Rate Regimes                 =       =       16

2.3.1  The Gold Standard Regime=       =       =       =       =       17

2.3.2  Flexible Exchange Rate Regime    =       =       =       =       18

2.3.3  The Crawling Peg Regime   =       =       =       =       =       19

2.3.4  The Managed Float Regime=       =       =       =       =       20

2.3.5  The European Monetary System   =       =       =       =       21

2.4     An Evaluation of Exchange Rate Regimes in Nigeria =   22

2.4.1  The Pre – Sap ara                  =       =       =       =       =       =       23

2.4.2  The Post –Sapara        =       =       =       =       =       =       24

2.5     Exchange Rate Determinants                  =       =       =       =       26

2.5.1  Interest Rate        =       =       =       =       =       =       =       28

2.5.2  Transaction Motive     =       =       =       =       =       =       29

2.5.3  Volume of International Transaction      =       =       =       29

2.5.4  Political Instability      =       =       =       =       =       =       30

2.5.5  Policy Actions    =       =       =       =       =       =       =       31

2.6     Review of Empirical Literature     =       =       =       =       32

2.6.1  Empirical Literature on the Study using Foreign    

          Data set = = = = = = = = = = = = = = = = = = = = = ==  =32                   

2.6.2    Empirical Literature on the Study Using

          Nigerian Data set = = = = = = == = = = = = = = = = = =  34

 

CHAPTER THREE: METHODOLOGY

3.1            An Overview of the Model = = = = = = = = = = = = = = =         49

3.2            Model Specification = = = = = = = = = == = = = = = = = =         50

3.3            Unit Root Test = = = = = = = = = = = = = = = = = = = = = =      52

3.4            Co Integration and Error Correction = = = = = = = = = = =       53

3.5.1  Economic Criteria = = = = = = = = = = = = = = = = = = = =      54

3.5.2  Statistical Criteria = = = = =  = = = = = =  = = = = = = = = =    54

3.5.3  Economics = = = = = = = = = = = = = = = = = = = = = = = = 54

 

CHAPTER FOUR:  PRESENTATION AND ANALYSIS OF RESULT

4.1            ADF Test for Stationary = =  = == = = = = = = =  = = ==  = 58

4.2            CO Integration Test = = =  = = = = = = = = = = = = = = = = 60

4.3            Result from Modeling log of GDP  by OLS = = = = = =  =  62

4.4            Economic Interpretation = = = = = = =  = = = = = = = = = =63

4.5            Statistical Criteria  = = = = = =  = = = = = = = = = = = = = = 69

4.5.1    T. Value  = = = = = =  = = = = = = = = = = = = = = = = = = = 70

4.5.2     F- Test = = = = = = = = = = = = = = = = = = = = = = = = = = 70

4.6            Evaluation based on econometric Criteria = = = =  = = = = 71

4.6.2 Test for Hetrosedasticity   = = = = = = = = = = = = = = = = =71

4.6.3 Test for Multicollinearity = = = = = = = = = = = = = = = =  =73

4.6.4  Normality Test = = = = = = =  = = = = = = = = =  = == = = = 74 

4.6.5  Test for Adequacy of the Model = = = = = = = = = = = =  = 75

4.7 Evaluation of the Hypothesis = = = = = = = = = = = =  = = = =76

 

CHAPTER FIVE

5.1 Summary  = = =  = = = = = = = = = = = = = = = = = = = = = = 78 

5.2 Conclusion = = = = = =  = = = = = = = = = = = = = = = = = = = 79

5.3 Policy Implications = = = = = = = = = = = =  = = = = = = = = = 81

Bibliography = = = = = =  = = = = = = = = = = = = = = = = = = = = 85


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