On
To: Sujan Koirala
Dec 11th, 2021
The devaluation of the naira and the state of the Nigerian economy
1985–2015 (an econometric analysis)
M.A. Loto
International Journal of Economics, Management and Accounting
ISSN: 2462-1420
Publication date: 2018
Abstract
PURPOSE: The paper investigated the impact of devaluation on the Nigerian economy from
1985–2016.
METHODOLOGY: To analyze the influence of devaluation as a policy on the Nigerian
economy this study adopts the elasticity approach by using the import and export demand
equation. The study used secondary time series data. For the analysis, Ordinary Least Squares
(OLS) regression was adopted, with initial stationarity and stability tests. The result of the unit
root test showed that the variables were of the same order of iteration being stationary at first
difference.
FINDINGS: The overall result showed that even at this period, devaluation is yet to provide a
solution for the Nigerian economy. This was because the sum of the relative prices of import and
export coefficients stood at less than 1. This confirms again that devaluation is not the right
policy for the Nigerian economy. It showed that devaluation as a policy stabilizing mechanism
does not work out well for the Nigerian economy.
IS DEVALUATION CONTRACTIONARY? EMPIRICAL
EVIDENCE FOR PAKISTAN
Muhammad Shahbaz, Faridul Islam, Naveed Aamir
Economic Change and Restructuring
ISSN: 15739414
Publication date: 2012
Abstract
Purpose: the paper examines the effect of real devaluation on economic growth. In the
empirical model we include few other theoretically justified variables e.g., money supply,
foreign remittances, and government spending as they appear relevant for Pakistan.
Methodology: The ADF unit root test is used for stationarity of the series. Also, to capture
possible structural breaks due to currency regimes shifts, the Saikkonen and Lu¨tkepohl unit root
test is used. We apply the ARDL bounds testing approach to cointegration to explore a long run
relation among the series; and the variance decomposition method and impulse response function
for the direction of causality.
FINDINGS: The results show that real devaluation is contractionary. It also found that
government spending, money supply, and foreign remittances exert positive impact on economic
growth. Devaluation makes import of intermediate inputs more expensive which raised the costs
of production. Pakistan’s exports are not well diversified, nor are they competitive due to high
domestic inflation and weak marketing strategies. Pakistan which depends more on imported
inputs are more likely to face contractionary effects from devaluation in the short run because of
higher cost of production relative to the increase in the volume of exports. This condition
perhaps, is a good description of the situation in Pakistan.
Impact of devaluation on industrial exports in Saudi Arabia
Mahmood Haider, Al Khateeb Tarek Tawfik Yousef & Ahmad Nawaz
Aktual'Ni Problemy Ekonomiky
ISSN: 19936788
Publication date: 2017
Abstract
PURPOSE: This study has aimed at finding the effects of devaluation on industry-specific
exports in Saudi Arabia by using the annual data (1970–2015) for each industry. the study aims
to explore whether the impact of Saudi currency devaluation, a typical fixed exchange rate
country (later converted into real exchange rate) have positive effects on industrial exports or
not. Secondly, negative movements in exchange rate, devaluation, and positive movements in
exchange rate, appreciation, do not necessarily have the same impacts.
METHODOLOGY: This study considers the annual data series of exports of some major
products of Saudi Arabia, e.g., chemical products, electrical products, foodstuff, metal & articles,
mineral products, plastic product and others exports of small industries for the period of 1970–
2015. Data on industrial exports and real exchange rates is collected from Saudi Arabian
Monetary Agency (SAMA). The world real GDP (income of the rest of the nations) as an
indicator for world demand for Saudi exports is collected from the World Development
Indicators (WDI). All the variables are then converted into logarithm to capture log-linear
relationships.
FINDINGS: Devaluation has been also helpful in raising industrial exports, except foodstuff,
plastic products and some other export categories. Asymmetrical effects of devaluation and
appreciation have been found for industrial exports. This study thus confirms that devaluation of
Saudi riyal promotes industrial exports.
The Contractionary and Expansionary Effects of Devaluation:
Empirical Evidence from Turkey
Veli Yilanci and Aycan Hepsağ
Journal of Economic Cooperation & Development
ISSN: 13087800
Publication date: Mar 2011
Abstract
PURPOSE: Main aim of this study to examine the effect of real devaluation on domestic
output for Turkey over the period 1987Q1-2008Q4.
METHODOLOGY/DESIGN: the paper employed the quarterly data over the period
1987Q1- 2008Q4 which obtained from International Financial Statistics database and Central
Bank of the Republic of Turkey Electronic Data Delivery System and unit root and cointegration
tests. It also used the Augmented Dickey Fuller (ADF) unit root test to determine the integration
properties of the variables
FINDINGS: The results show that, increasing money supply has no effect on output; both
foreign income and government spending are neutral in short run but has positive effect on
output. Real devaluation is contractionary in the short run but it is expansionary in the long run
for Turkey
Reference
Mahmood Haider, Al Khateeb Tarek Tawfik Yousef & Ahmad Nawaz(2017). Impact of
devaluation on industrial exports in Saudi Arabia: j-curve analysis *. Aktual'Ni Problemy
Ekonomiky = Actual Problems in Economics, (189), 331-341. Retrieved from
https://www.proquest.com/scholarly-journals/impact-devaluation-on-industrial-exports-saudi/
docview/1891693101/se-2?accountid=188898
Veli Yilanci and Aycan Hepsağ(2011). The contractionary and expansionary effects of
devaluation: Empirical evidence from turkey. Journal of Economic Cooperation &
Development, 32(1), 19-30. Retrieved from
https://www.proquest.com/scholarly-journals/contractionary-expansionary-effects-devaluation/
docview/1114068900/se-2?accountid=188898
Muhammad Shahbaz, Faridul Islam, Naveed Aamir (2012). Is devaluation contractionary?
evidence for Pakistan. Economic Change and Restructuring, 45(4), 299-316.
doi:http://dx.doi.org/10.1007/s10644-011-9119-7
Loto, M. A. (2018). The devaluation of the naira and the state of the Nigerian economy 1985–
2015(an econometric analysis). International Journal of Economics, Management and
Accounting, 26(2), 311-327. Retrieved from
https://www.proquest.com/scholarly-journals/devaluation-naira-state-nigerian-economy-1985/
docview/2167214414/se-2?accountid=188898
Getaneh, M. A. (2019). Does real exchange rate devaluation improve the current account balance
of highly indebted low income countries? African Journal of Economic and Management
Studies, 10(2), 212-225. doi:http://dx.doi.org/10.1108/AJEMS-11-2017-0287
