ATTENTION:
BEFORE YOU READ THE CHAPTER ONE OF THE
PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!
INFORMATION:
YOU CAN GET THE COMPLETE PROJECT OF THE
TOPIC BELOW. THE FULL PROJECT COSTS N5,000 ONLY. THE FULL INFORMATION ON HOW TO
PAY AND GET THE COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN
CALL: 08068231953, 08168759420
COMPARATIVE
ANALYSIS OF MONETARY AND EXCHANGE RATE POLICY ON NIGERIA ECONOMIC GROWTH
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
However,
monetary policy as a technique of economic management to bring about
Sustainable economic growth and development has been the pursuit of nations and
formal articulation of how money affects economic aggregates dates back the
time of Adams Smith and later championed by the monetary economists (Balogun,
2007). Since the expositions of the role of monetary policy in influencing
macroeconomic objectives like economic growth, price stability, equilibrium in
balance of payments and host of other objectives, monetary authorities are
saddled the responsibility of using monetary policy to grow their economies
(Bogunjoko, 2011). In Nigeria, monetary policy has been used since the Central
bank of Nigeria was saddled the responsibility of formulating and implementing
monetary policy by Central bank Act of 1958. This role has facilitated the
emergence of active money market where treasury bills, a financial instrument
used for open market operations and raising debt for government has grown in
volume and value becoming a prominent earning asset for investors and source of
balancing liquidity in the market (Chimezie, 2012). There have been various
regimes of monetary policy in Nigeria some times, monetary policy is tight and
at other times it is loose mostly used to stabilize prices. The economy has
also witnessed times of expansion and contraction but evidently, the reported
growth has not been a sustainable one as there is evidence of growing poverty
among the populace (Balogun, 2007).
Moreover, a
country foreign exchange policy is derived from the perceived overall economic
objectives to be achieved and the expected direction of growth (CBN,
2003). Consequently, non-conflicting
sectoral policies are conceived within the ambit of the overall policy
framework such that each sectoral policy reinforces each other.A simplest
definition has it that exchange rate is the price of one currency in terms of
another. Thus, it measures the worth of a domestic economy in terms of another
economics (Adelowokan, 2012).Also, exchange rate is an important economy metric
as it reflects underlying strength and competitiveness with world economies
(Asinya and Takon, 2014; Akonji, 2013). Whether fixed or floating, exchange
rate affects macroeconomic variables such as import, export, output, interest
rate, inflation rate etc. Chong and Tan (2008) empirical analysis revealed that
the exchange rate is responsible for changes in macroeconomic fundamentals for
the developing economies. Mehdi, (2014) state that the effect of exchange rate
fluctuations on economic growth varies in different countries asserting that
one of the factors determining the way exchange rate fluctuations affect
economic growth is the development level of each country's financial markets
revealing that new theories emphasize the high correlation between economic
growth and innovation.
Exchange rates regularly quoted
between all major currencies mostly that of the trading partners, but
frequently one important currency (that is the dollar) is used as a standard in
which to express and compare all rates.It is one of the key tools in economic
management and in the stabilization and adjusts policies in developing
countries. Exchange rate policies play a vital role in determining the position
of a country in terms of international competition (Asinya, 2014).
In autonomous markets, the exchange
rate was seen to be volatile, and depreciated at will. This exerted pressure on
the official foreign exchange market, and made the monetary policy target of
the period to continually unrealistic due to the inflationary financing of
government deficit with the deregulation of the economy, a market –based
framework for the determination of exchange rate was adopted. It was envisaged
that the realization of macroeconomic stability would lead to the elimination
of distortions in the external sector and this enhance growths, stimulate non
oil exports, increase foreign exchange inflows, moderate demand pressure in the
foreign exchange market and generally improve foreign exchange utilization. The
attainment of a realistic exchange rate was also expected to eliminate the
parallel market premium capital flight and also enhance the inflow of foreign
investments (CBN: 2008).
From the forgoing it becomes clear
that the concept of exchange rate policies has the impact so as to show in the
one of the macroeconomic variables, it contribute to economic growth of
Nigeria. It is therefore necessary that a research work be carried out to this
effect so as to provide suggestion that will served as a guide towards the
actualization of macroeconomic objectives that will bring about the level of
targeted economic growth in Nigeria (Obadan, 2009).
On the other hand, the exchange rate
is perhaps one of the most widely discussed topicsin Nigeria today. This is
-economic not surp importance especially in a highly import dependent economy
as Nigeria (Olisadebe, 2012). Macroeconomic policy formulation is a process by
which the agencies responsible for the conduct of economic policies manipulate
a set of instrumental variables in order to achieve some desire objectives. In
Nigeria these objectives include achievements of domestic price stability,
balance of payment equilibrium, efficiency, equitable distribution of income and
economic growth and development (Akonji, 2013).
At the same
time, economic growth refers to the continuous increase in a country’s national
income or the total volume of goods and services, a goodindicator of economic
growth is the increase in Gross National Product (GNP) over a long period of
time. Economic development on the overhead implies both structural and
functional transformation of all the economic indexes from a low to a high
state (Siyan, 2008) one of the macro –economic variables of importance is the
exchange rate policy country.
Whereas,
exchange rate policy involves choosing where foreign transaction will take
place (Obadan, 2009). Exchange rate policy is therefore a component of
macroeconomic management policies the monetary authorities in any given economy
uses to achieve internal balance in medium run. Specifically internal balances
mean the level of economic activity that is consistent with the satisfactory
control of inflation. On the contrary, external or sustainable current account
deficit financed on lasting basis expected capital inflow.
1.2
STATEMENT OF THE PROBLEM
The exchange
rate of the naira was relatively stable between 1973 and 1979 during the oil
boom er (regulatory require). This was also the situation prior to 1990 when agricultural
products accounted for more than 70% of the nation’s gross domestic products
(GDP) (Ewa, 2011).
However, as
a result of the development in the petroleum oil sector, in 1970’s the share of
agriculture in total exports declined significantly while that of oil
increased. However, from 1981 the world oil market started to deteriorate and
with its economic crises emerged in Nigeria because of the country’s dependence
on oil sales for her export earnings. To underline the importance of oil export
to Nigerian economy, the gross national product (GNP) fell from $76 billion in
1980 to $40 billion in 1996, a number of economic growthbecame negative as
result of the adoption of structural adjustment programme (SAP).This major
problem which this study is designed to solve is whether the exchange rate has
any bearing on Nigerians economic growth an d development. While some Economist
dispute the ability of change in the real exchange rate to improve the trade
balance of developing countries (Johansen, 2013) because of elasticity of their
low export, others believe that structural policies could however change the
long-term trends in the terms of trade and the prospects for export led growth.
Instabilities of the foreign exchange rate is also a problem to the economy.
1.3
OBJECTIVE OF THE STUDY
The main
objective of the study is to showcomparative analysis of monetary and exchange
rate policy on Nigeria economic growth.Identifying the impacts of the unstable
exchange rate of the naira on these major macro-economic variables would
however, depend on the conditions prevailing in the economy at a given time.
The specific
objectives of the study are:
(1) To
investigate the effects of foreign exchange rate and policies on the economic
growth of Nigeria
(2) To see
how exchange rate in Nigeria interact with a macroeconomic variable to bring
about economic growth.
(3) To
ascertain the effect of policy recommendations on both exchange rate and
economic growth using macro-economic variables.
(4) To have
a realistic exchange rate this will remove the existing distortions and
distortions and disequilibrium in the external sector of the economy.
(5) To have a
stable and realistic exchange rate that is in consonance with other
macro-economic fundamentals.
1.4 RESEARCH
HYPOTHESIS
Based on the
objectives of the study, the following hypothesis was formulated.
Ho: Exchange
rate policy has no significant impact on Nigeria economic growth and
development.
Hi: Exchange
rate policy has a significant impact on Nigerians economic growth and
development.
1.5
SIGNIFICANCE OF THE STUDY.
The
significance of this research work lies in the fact that if the cause of the unstable
exchange rate of the naira is identified and corrected, the economy will
rapidly grow and develop into an advance one. This is so because if the
unstable exchange rate of naira is proved to be affecting the macro- economy
major variables badly, including Realexchange rate, Real interest rate,
inflation rate, gross domestic product and trade openness of the country,
attempts should be made to stabilize the exchange rate. This is because these
variables are gauge for the measurement of growth and development of any
economy. Importantly, this study would help the government and the central bank
of Nigeria (CBN) to identify the strength and weakness of each foreign exchange
system and hence adopt the policy that suits the economy best. This will definitely
enhance growth and development of the economy, the study will also serve as a
guide to future researchers on this subject.In general, the research is of
immense benefit to the following:- Importer who make payments in foreign
currencies, policy makers of the central bank of Nigeria who issues the
guideline government international trade practice, bank-especially the
commercial banks and merchant banks and the general public who has a right to
contribute and be informed of the activities our banking institutions.
1.6
LIMITATIONS OF THE STUDY
The study is
structured to evaluate the Nigeria exchange rate as the pilot of economy growth
and development. The study is therefore limited to the core economic growth in
Nigeria and not the socio- political factors of the foreign exchange rate.
1.7 THE
SCOPE OF THE STUDY
This project
focuses on the effect of exchange rate regimes on the economic growth of
Nigeria as necessitated by the inflationary pressure generated by recent global
economic crisis through the exchange rate sensitivity.
In addition,
the scope consist of the regulatory and deregulatory exchange rate period i.e.
the fixed exchange rate and the floating exchange rate period. The study is
based on core macro- economic performance of Nigeria.
1.8
DEFINITION OF TERMS
Exchange
rate: This iscurrencythein pricetermsof another.
Foreign
exchange: Foreign exchange is a means of payment for international transaction;
it is made up of currencies of other countries that are freely acceptable in
settling international transactions.
Monetary:
This is pertaining to money which helps in executing budgets and improving the
nation economic through rightful policy implementations
Policy: This
refers to guiding principal, rule, course of action etc. necessary and
expressed by authoritative body or government in order to achieve growth and
stability.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following
instructions and information if you will like to order/buy our complete written
material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount
(#5,000) into our bank Account below, send the following information to
08068231953 or 08168759420
(1) Your project
topics
(2) Email
Address
(3) Payment
Name
(4) Teller Number
We will send your material(s) after
we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
FOR MORE INFORMATION, CALL:
08068231953 or 08168759420
AFFILIATE
Comments
Post a Comment