THE IMPACT OF EXCHANGE RATE ON INDUSTRIAL OUTPUT IN NIGERIA
Asongo Simon Ternenge
Volume 2 Issue 2
Abstract
This study examined the impact of exchange rate on industrial output in Nigeria from 1986 to 2021. Empirical test of stationarity was carried out using Philips-Perron test. The results from the unit root test shows that consumer price index is stationary at levels while exchange rate, interest rate and industrial output are integrated of order one. The Bounds cointegration test shows the existence of long run relationship between exchange rate, consumer price index, interest rate and industrial output. Finally, Autoregressive Distributed Lag (ARDL) analysis indicates that there is a positive and significant link between exchange rate, consumer price index and industrial export in Nigeria both in the short run and in the long-run. The study recommends an attempt by the government to encourage acceptable exchange rate policies in order to fully exploit the benefits of the sector and promote industrial output. To increase the impact of consumer price index on industrial output, a concerted effort should be directed toward price control in the economy to enhance sustainable economic growth through increased industrial output. Key words: Exchange Rate, Industrial Output, Bounds Test, ARDL
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