Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

Does government expenditure has any impact on exchange rate in Nigeria?

Author(s): Adegbola Olubukola Otekunrin, Okoye Nonso John, Damilola Felix Eluyela, Ajagbe Grace Oyefunke, Oriade Opeyemi Abosede, Victoria Ogochukwu Obi-Nwosu, Chidi-Okeke Chioma Nnenna

The research examined the impact of government exchange rate expenditures in Nigeria for period 1986 to 2019. The study used secondary data from the Central Bank of Nigeria's Statistical Bulletin, and VAR Vector Auto regression Estimates to measure the impact of the independent variables (capital and recurring spending, deficit finance, money supply, and trade openness) on the dependent variable exchange rate. The study revealed that government spending has positive but insignificant effect on exchange rate. This goes to show that government spending is not a reliable policy instrument for exchange rate stability in Nigeria within the period of the study therefore the study makes the following recommendations. There is need for proper re-evaluation of government fiscal policies before adoption, credible supervision, monitoring and prudent spending in a bid to achieve the desired or stated results. Government should invest in capital expenditures on infrastructures and human capital development. The government should build an export-driven master plan to catalyze Nigeria's economic and industrial growth and free the country from import dependency.

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