Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL Approach
This paper examined the long-run association of real exchange rates, real oil prices, interest rate, inflation and external debt in Nigeria. It used monthly data for the period, 1980-2017. The model employed in the study started with testing for the existence of unit roots which were found to be a...
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doaj-901531090400414fa04ac3fff1aaead02020-11-25T02:37:30ZengDanubius UniversityActa Universitatis Danubius: Oeconomica2065-01752067-340X2019-10-01156275290Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL ApproachMathew E. Rotimi0Ojo Johnson Adelakun1David Babatunde2University of KwaZulu NatalUniversity of KwaZulu NatalObafemi Awolowo UniversityThis paper examined the long-run association of real exchange rates, real oil prices, interest rate, inflation and external debt in Nigeria. It used monthly data for the period, 1980-2017. The model employed in the study started with testing for the existence of unit roots which were found to be a combination of orders I(0) and I(1), fulfilling the ARDL condition. Also, using various cointegration tests, the study reveals that cointegration exists among the selected variables. The granger causality test found that oil price positively and significantly impacted exchange rates in Nigeria, suggesting that a rise in global oil prices resulted in exchange rate appreciation. In a similar way, increases in oil prices triggered inflation. In view of this, it is suggested that appropriate policy measures be considered during oil price increases to mitigate unfavourable movement in exchange rates.http://journals.univ-danubius.ro/index.php/oeconomica/article/view/5932/5153ardl; external debt; oil prices; granger causality; exchange rates |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Mathew E. Rotimi Ojo Johnson Adelakun David Babatunde |
spellingShingle |
Mathew E. Rotimi Ojo Johnson Adelakun David Babatunde Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL Approach Acta Universitatis Danubius: Oeconomica ardl; external debt; oil prices; granger causality; exchange rates |
author_facet |
Mathew E. Rotimi Ojo Johnson Adelakun David Babatunde |
author_sort |
Mathew E. Rotimi |
title |
Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL Approach |
title_short |
Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL Approach |
title_full |
Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL Approach |
title_fullStr |
Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL Approach |
title_full_unstemmed |
Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL Approach |
title_sort |
investigating oil prices and exchange rates nexus in nigeria: ardl approach |
publisher |
Danubius University |
series |
Acta Universitatis Danubius: Oeconomica |
issn |
2065-0175 2067-340X |
publishDate |
2019-10-01 |
description |
This paper examined the long-run association of real exchange rates, real oil prices, interest
rate, inflation and external debt in Nigeria. It used monthly data for the period, 1980-2017. The model
employed in the study started with testing for the existence of unit roots which were found to be a
combination of orders I(0) and I(1), fulfilling the ARDL condition. Also, using various cointegration
tests, the study reveals that cointegration exists among the selected variables. The granger causality test
found that oil price positively and significantly impacted exchange rates in Nigeria, suggesting that a
rise in global oil prices resulted in exchange rate appreciation. In a similar way, increases in oil prices
triggered inflation. In view of this, it is suggested that appropriate policy measures be considered during
oil price increases to mitigate unfavourable movement in exchange rates. |
topic |
ardl; external debt; oil prices; granger causality; exchange rates |
url |
http://journals.univ-danubius.ro/index.php/oeconomica/article/view/5932/5153 |
work_keys_str_mv |
AT mathewerotimi investigatingoilpricesandexchangeratesnexusinnigeriaardlapproach AT ojojohnsonadelakun investigatingoilpricesandexchangeratesnexusinnigeriaardlapproach AT davidbabatunde investigatingoilpricesandexchangeratesnexusinnigeriaardlapproach |
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