<abstract xmlns="http://www.w3.org/1999/xhtml">

<bold>Aim/purpose</bold> – Exchange rate volatility has remained a serious issue affecting economic stability, especially in developing countries. Thus, this study aimed at examining the impact of exchange rate volatility on economic growth in Nigeria.
<bold>Design/methodology/approach</bold> – The study employed the Generalized Autoregressive Conditional Heteroscedasticity (GARCH) model and the system Generalized Method of Moments (GMM) technique to analyse the time series data from the period January 1980 to December 2017. The study used the Augmented Dickey–Fuller and Philips–Perron tests to determine the presence of a unit root and the Johansen co-integration test to establish the relationship among the variables in the study.
<bold>Findings</bold> – The results of the estimates offer evidence that exchange rate volatility persists throughout the study period, and has a negative and significant effect on the economic growth of Nigeria. This result suggests that excessive volatility due to low inflows is inimical to the growth of the Nigeria economy. The findings of the study demonstrate a negative and significant relationship between inflation and economic growth. Moreover, while credit to the private sector and crude oil prices exerts positive and significant relationship with growth, the relationship between money supply, trade openness and government expenditure and economic growth is positive but insignificant.
<bold>Research implications/limitations</bold> – Therefore, it is important for the government to pursue policies and programs that would help ensure exchange rate stability and boost local production for both consumption and export. In addition, a holistic program of economic reforms is important to complement the exchange rate policy and stimulate economic growth.
<bold>Originality/value/contribution</bold> – The study shed some light on exchange rate volatility and confirmed its adverse effect and the importance of a stable environment on economic growth. In addition, the study introduced crude oil prices as a variable to the study of exchange rate volatility and economic growth from a developing country perspective.
</abstract>

Aim/purpose – Exchange rate volatility has remained a serious issue affecting economic stability, especially in developing countries. Thus, this study aimed at examining the impact of exchange rate volatility on economic growth in Nigeria.
Design/methodology/approach – The study employed the Generalized Autoregressive Conditional Heteroscedasticity (GARCH) model and the system Generalized Method of Moments (GMM) technique to analyse the time series data from the period January 1980 to December 2017. The study used the Augmented Dickey–Fuller and Philips–Perron tests to determine the presence of a unit root and the Johansen co-integration test to establish the relationship among the variables in the study.
Findings – The results of the estimates offer evidence that exchange rate volatility persists throughout the study period, and has a negative and significant effect on the economic growth of Nigeria. This result suggests that excessive volatility due to low inflows is inimical to the growth of the Nigeria economy. The findings of the study demonstrate a negative and significant relationship between inflation and economic growth. Moreover, while credit to the private sector and crude oil prices exerts positive and significant relationship with growth, the relationship between money supply, trade openness and government expenditure and economic growth is positive but insignificant.
Research implications/limitations – Therefore, it is important for the government to pursue policies and programs that would help ensure exchange rate stability and boost local production for both consumption and export. In addition, a holistic program of economic reforms is important to complement the exchange rate policy and stimulate economic growth.
Originality/value/contribution – The study shed some light on exchange rate volatility and confirmed its adverse effect and the importance of a stable environment on economic growth. In addition, the study introduced crude oil prices as a variable to the study of exchange rate volatility and economic growth from a developing country perspective.

The impact of exchange rate volatility on the Nigerian economic growth: An empirical investigation

Department of Financial Studies, Faculty of Management Sciences

Journal of Economics and Management

This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License.

Aim/purpose – Exchange rate volatility has remained a serious issue affecting economic stability, especially in developing countries. Thus, this study aimed at...

The impact of exchange rate volatility on the Nigerian economic growth: An empirical investigation

Published Online: Jul 23, 2021

Page range: 45 - 68

Received: Sep 30, 2018

Accepted: May 10, 2019

DOI: https://doi.org/10.22367/jem.2019.37.03

Keywords
exchange rate volatility, economic growth, GARCH, GMM, developing country

© 2019 Benjamin Ighodalo Ehikioya, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License.

The impact of exchange rate volatility on the Nigerian economic growth: An empirical investigation

Published Online: Jul 23, 2021

Page range: 45 - 68

Received: Sep 30, 2018

Accepted: May 10, 2019

DOI: https://doi.org/10.22367/jem.2019.37.03

Keywordsexchange rate volatility, economic growth, GARCH, GMM, developing country

© 2019 Benjamin Ighodalo Ehikioya, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License.

Keywords
exchange rate volatility, economic growth, GARCH, GMM, developing country