Economic and Financial Review
Publisher
Research Department, Central Bank of Nigeria
Keywords
Real exchange rate, Purchasing power parity, Exchange rate misalignment, Exchange rate-Nigeria
Abstract
This study estimates the equilibrium real exchange rate for Nigeria using the Purchasing Power Parity (PPP) approach and the Behavioural Equilibrium Exchange Role (BEER) model as well as, determined the extent, of Naira exchange rate misalignment over the period l970 q1 to 2013 q4. Evidence of three major episodes of over/undervaluation of the nominal exchange rate using the PPP were provided. The WER model results established the existence of a long-run interaction between the real exchange rate (RER) and the fundamental variables. ln particular, the behaviour of the RER is determined by the degree of openness, net foreign asset, real interest rate differential and government spending. Furthermore, the result suggest that 4.9 per cent of the short-run shocks are obviated each quarter.
Issue
50
Volume
3
Recommended Citation
Duke, O. O., Adesanya, O. and Ahmadu, A. R. (2012). Still on the equilibrium real exchange rate of the naira: a re-examination, Economic and Financial Review (EFR), 50 (3) Part A: 203-233