EXCHANGE RATE VOLATILITY, TRADE OPENNESS AND NIGERIAN ECONOMIC GROWTH.

Abstract

This study examines the existing relationships among exchange rate volatility, trade openness and Nigerian economy from 1981 to 2021, using Autoregressive Distributed Lag (ARDL) bound and Pairwise Granger causality technique to achieve the stated objectives.  The findings revealed a long-run relationship among the research variables.  It was discovered that external reserve had positive significant short-run and long-run effects on Nigerian economy, while exchange rate volatility had negative short-run significant effect on economic growth.  Unidirectional causal relationship was established between exchange rate volatility and economic growth as well as between trade openness and economic growth.  A bidirectional causality was established between total tax on goods and economic growth in Nigeria.  It is therefore recommended that government should come with policies to regulate exchange rate for naira to regain more strength against foreign currencies and as a result, promoting trade openness.  Also, government should encourage more export through infant industrial promotion and economic diversification to support trade openness in the process of attaining economic growth in the country.