Quarterly Journal of Econometrics Research

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No. 1

Issues of Unemployment in Nigeria: Effect of Real Exchange Rate and Inflation Interaction

Pages: 17-28
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Issues of Unemployment in Nigeria: Effect of Real Exchange Rate and Inflation Interaction

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DOI: 10.18488/journal.88.2019.51.17.28

Raji, Rahman Olanrewaju

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Raji, Rahman Olanrewaju (2019). Issues of Unemployment in Nigeria: Effect of Real Exchange Rate and Inflation Interaction. Quarterly Journal of Econometrics Research, 5(1): 17-28. DOI: 10.18488/journal.88.2019.51.17.28
The paper examines the issues regarding the effects of inflation and real exchange rate on unemployment: if change in real exchange rate and inflation reduce the level of unemployment and that inflation moderates the effect of real exchange rate on unemployment in Nigeria The author employs the Generalized Method of Moments (GMM) technique which is able to control endogeneity of variables in the study. The findings show that real exchange rate depreciation and inflation have positive impact on unemployment which in turn erodes the economic growth. Besides, the positive effect of real exchange rate depreciation on unemployment was contributed by high inflation level; the marginal effect of real exchange rate depreciation on unemployment increase with the level of inflation. This signifies that the higher the rate of inflation, the more real exchange rate depreciation spurs unemployment. Based on the findings, there is a need by the economic policy makers and authorities to establish drastic measures towards curbing high inflation level to a moderate and stable level which can stimulate a certain level of real exchange rate which in turn can urge economic growth through increase in employment opportunity.
Contribution/ Originality
This study contributes to the existing studies by distinguishing itself identifying the simultaneous impact of these two fluctuating variables (inflation rate and real exchange rate ) on unemployment, unlike existing literatures which addressed these impacts on unemployment separately and assessing how inflation influences the impact of real exchange rate on unemployment in Nigeria. The study adopts descriptive analysis and generalized method of moment.

Purchasing Power Parity Hold in Major SAARC Countries? Panel Cointegration Analysis

Pages: 1-16
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Purchasing Power Parity Hold in Major SAARC Countries? Panel Cointegration Analysis

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DOI: 10.18488/journal.88.2019.51.1.16

Rashid Mehmood , Muhammad Zeeshan Younas

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Rashid Mehmood , Muhammad Zeeshan Younas (2019). Purchasing Power Parity Hold in Major SAARC Countries? Panel Cointegration Analysis. Quarterly Journal of Econometrics Research, 5(1): 1-16. DOI: 10.18488/journal.88.2019.51.1.16
In an effort to provide a better understanding of the large variation in price levels between countries, this paper examines the validity of the purchasing power parity (PPP) hypothesis using monthly data of SAARC countries over the period of 2000-2017. We utilized four econometric tests to examine the existence of this hypothesis in the understudy region. Panel results show that PPP seems to be moderately held in a panel of SAARC, while in the country by country analysis we find partial support of PPP for all economies. We also find that the price and exchange rate have a long-run relationship while ECM analysis shows that the exchange rate and price differential are correlated in the short run, and price and exchange rate have bidirectional causality relationship. In addition, the dummy variable analysis shows that the Global Financial Crisis 2007-08 significantly affect the SAARC countries exchange rate in terms of depreciation. However, these types of external shocks do not have any permanent effect on the real exchange rate and other things remaining the same, no active policy intervention is warranted for the sustainability of external balance.
Contribution/ Originality
This contributes to the existing literature by estimating the long-run parameters and short-run dynamics to check the speed of adjustments towards the long-run equilibrium.