International Journal of Economics and Financial Research
Online ISSN: 2411-9407
Print ISSN: 2413-8533
Print ISSN: 2413-8533
Volume 5 Number 12 December 2019
Exchange Rate Management and Regime: Quo Vadis Nigeria?
Authors: Ogbonna Udochukwu Godfrey ; Ejem Chukwu Agwu
This study investigated a pertinent question on the lips of every Nigerian; exchange rate regime, Quo Vadis Nigeria? Nigeria, Quo Vadis (where do we go)? under two alternative managed floating regimes; Dutch Auction System and post Dutch Auction System regimes, within the Autoregressive Distributive Lag methodology using monthly data covering from July 2002 to July 2017. The results for the full sample show that none of the selected macroeconomic variables has a significant short run relationship with the nominal effective exchange rate. In the long run, all the variables, except interbank rate, show negative relationship with nominal effective exchange rate. However, while the effects of oil prices, interbank rate and the prime lending rate are significant, the effects of inflation and stock prices are insignificant. The results for the Dutch Auction System sample show little evidence of a negative short run relationship between nominal effective exchange rate and inflation while oil prices, prime lending rate, interbank rate and stock prices all show no evidence of a short run relationship with exchange rate. On the contrary, oil prices, prime lending rates and stock prices all show significant negative long run relationship with nominal effective exchange rate. The results for the post Dutch Auction System sample show evidence of a positive short run relationship between stock prices, interbank rate and nominal effective exchange rate. On the other hand, inflation, oil prices and prime lending rate show no short run relationship nominal effective exchange rate. However, there is evidence of a lagged positive relationship between inflation and nominal exchange rate. The cointegration test for post Dutch Auction System sample gives inconclusive results. We therefore, conclude that the choice of exchange rate regime matters for macroeconomics performance in Nigeria and that the closure of the Dutch Auction system by the monetary authorities significantly altered the relationship between nominal exchange effective exchange rate and macroeconomic variables.
Market Failure: Reasons and Its Accomplishments
Authors: Md. Touhidul Islam
In free market economy; at present there are lots of reasons of market failure. The aim of this paper is to find out those reasons and analyses the probable solutions for recovering those market failures. This paper shows that market failure mostly resulting from an incomplete information as well as information asymmetry between providers and consumers, the effect of externalities, imperfect information, imperfect mobility of factors of production, income inequality, market dominance, negative externalities, positives externalities, public goods and the divergence between social and private time preference rates. Lot of solutions have been found out to overcome the market failure includes Tax on Negative Externalities, Subsidy on positive externalities, Laws and Regulations, Buffer stocks, Government advertising and campaigns. The conceptual framework has been developed by finding and evaluating the market failure overcoming factors where the free market economy can reach to the market equilibrium position from the market disequilibrium condition. Thus, the recommendations of this research will be helpful for home govt. and Businessman to keep the open market in equilibrium position.