Exchange Rates and the Consumer Price Index in Nigeria: A Causality Approach

Adetiloye, K. A. (2010) Exchange Rates and the Consumer Price Index in Nigeria: A Causality Approach. Journal of Emerging Trends in Economics and Management Sciences (JETEMS). pp. 114-120.

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Abstract

This paper was motivated by the need to establish the impact of importation into �igeria and its main objectives were to find out the significant relationships between the official and parallel exchange rates and the consumer price index (CPI.). It also established that import ratio in the economy is a contributor to the increase in the cost of living (CPI) in the country. The paper adopted the techniques of correlation and Granger causality to find the significance of the relationships between the index and the exchange rates. It found out that there is higher positive relationship between the ratio of imports and the index than exist between the parallel and official rates. The coefficient between autonomous exchange rates and the consumer price index (CPI) is less significant than official rate, while the import ratio in the economy shows a near two-way balance causality with the consumer price index. The more significant one is causality is that import ratio granger causes CPI. The paper recommends a more liberalised foreign exchange market to reduce the impact of the parallel market and increase in domestic production of consumables to reduce importation of domestically substitutable goods in the economy.

Item Type:	Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User:	Mrs Patricia Nwokealisi
Date Deposited:	08 Nov 2013 19:19
Last Modified:	08 Nov 2013 19:19
URI:	http://eprints.covenantuniversity.edu.ng/id/eprint/1845

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