Browsing by Author "Tule, M. K."
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Item Computation of Nigeria’s real effective exchange rate indices(Central Bank of Nigeria, Research Department, 2007-03) Tule, M. K.; Duke, O. O.This paper computed Nigeria’s real and nominal effective exchange rate (REER and NEER) indices using a pool of high frequency monthly data for the period 1996-2007. The paper observed that the REER index appreciated most of the period due to inflationary pressures in Nigeria, implying a loss in Nigeria’s competitiveness relative to its major trading partners.Item Computation of Nigeria’s Real Effective Exchange Rate Indices(Research Department, Central Bank of Nigeria, 2007-03-01) Tule, M. K.; Duke, O. O.The exchange rate is a useful macroeconomic indicator which aid policy makers to take informed actions to stimulate or sustain the economy on a long run growth path. Thus, several exchange rate indices (bilateral nominal/real exchange rate, nominal effective exchange rate, real effective exchange rate, purchasing power parity, etc) are computed for different policy information. This paper computed Nigeria’s real and nominal effective exchange rate (REER and NEER) indices using a pool of high frequency monthly data for the period 1996-2007. The paper observed that the REER index appreciated most of the period due to inflationary pressures in Nigeria, implying a loss in Nigeria’s competitiveness relative to its major trading partners. The conclusion was that the naira was overvalued in real terms. The NEER also appreciated during the review period against the currency indices of the major trading partners, indicating a stronger naira. The paper advocated a basket approach to naira nominal exchange rate determination in which the relative macroeconomic developments in major trading partner economies are factored into the market exchange rate of the naira. A major shortcoming of the present study is that subregional effects of Nigeria’s trade with its neighbors were not factored into the computations due to dearth of data. Current data indicate low level trade between Nigeria and its neighbors and other African countriesItem National Income Policy in a Deregulated Economy: the Nigerian perspective.(Central Bank of Nigeria, 2010-03) Tule, M. K.This paper examines the propriety of a national income policy in a deregulated economy. The literature indicates that various interest groups in the country tend to protect their narrow interests when negotiating for higher wages. Consequently, the goals of government to achieve equitable income distribution in the country with a national income policy are often at variance with the private interests. While congenial atmosphere for collective bargaining was deemed desirable foe achieving effective income growth, an environment of consistently rising prices was considered an anticlimax to growth and development. Consequently, the paper opined that in a market economy, a national income policy that does not include elements of restraint on prices development was likely to fail. Thus, an income policy must be packaged as a set of comprehensive macroeconomic, monetary and fiscal policies for effective results. As part of the national income policy, an income guidepost with provision for periodic review is advocated.Item Nigeria's monetary conditions index(Central Bank of Nigeria, 2014-09) Tule, M. K.; Isah, A. M.; Okafor, P. N.; Pedro, I.; Ukeje, S. A.; Oji, K.; Oladunni, S.The paper aimed to construct a monetary conditions index (MCI) for Nigeria to aid the evaluation of the stance of monetary policy. Quarterly data for 91-day treasury bill rate (TBR), real exchange rate (RER), inflation rate (INF), real private sector credit (RCP), and real gross domestic product (RGDP), covering the period 2000Q1 to 2014Q1, were utilised. The period coincided with key reforms in the money and foreign exchange markets, culminating in the adoption of a new monetary policy framework in 2006. Following some econometric diagnostic tests, an aggregate demand function was estimated using the Johansen co-integration technique.Item Nigeria's Monetary Conditions Index(Research Department, Central Bank of Nigeria, 2014-09) Tule, M. K.; Isah, A. M.; Okafor, P. N.; Pedro, I.; Ukeje, S. A.; Oji, K; Oladunni, S.The paper aims to construct a monetary conditions index (MCI) for Nigeria to aid the evaluation of the stance of monetary policy. Quarterly data for 91-day treasury bill rate (TBR), real exchange rate (RER), inflation rate (INF), real private sector credit (RCP), and real gross domestic product (RGDP), covering the period 2000Q1 to 2014Q1, were utilised. The period coincided with key reforms in the money and foreign exchange markets, culminating in the adoption of a new monetary policy framework in 2006. Following some econometric diagnostic tests, an aggregate demand function was estimated using the Johansen co-integration technique. The resultant long-run coefficients were applied to the deviations of the MCI component variables to derive the monetary conditions indices. The narrow and broad MCIs suggested a relatively tight monetary environment with the broad MCI being more volatile, compared with the narrow MCI due to the inclusion of the credit component, which reflects the continual swings in banking system liquidity. Our findings revealed that the exchange rate is a strong channel of monetary policy transmission mechanism in Nigeria, and thus very crucial in the conduct of monetary policy.Item Oil price shocks and real exchange rate movement in Nigeria(Research Department, Central Bank of Nigeria, 2014-03) Tule, M. K.; Osude, D.This paper investigated the relationship between oil price and real exchange rate movement in Nigeria. Crude oil exports account for over 90 per cent of Nigeria's foreign exchange earnings hence, the economy may be vulnerable to instability in international oil prices, which the country as a small open economy, cannot influence. Using monthly data covering the period 2000 to 2013, this study employs GARCH process to test the relationship between oil price and exchange rate volatility in Nigeria. The results of GARCH (1,1) and EGARCH (1,1) suggest the persistence of volatility between real oil prices and the real exchange rate. The Smooth Transition Regression (STR) results also show the expected reaction from the exchange rate following changes in oil prices. Thus, it concluded that oil price fluctuations lead exchange rates movement in Nigeria.Item Oil Price Shocks and Real Exchange Rate Movement in Nigeria(Central Bank of Nigeria, 2014-03) Tule, M. K.; Osude, D.This paper investigated the relationship between oil price and real exchange rate movement in Nigeria. Crude oil exports account for over 90 per cent of Nigeria's foreign exchange earnings hence, the economy may be vulnerable to instability in international oil prices, which the country as a small open economy, cannot influence. Using monthly data covering the period 2000 to 2013, this study employs GARCH process to test the relationship between oil price and exchange rate volatility in Nigeria. The results of GARCH (1,1) and EGARCH (1,1) suggest the persistence of volatility between real oil prices and the real exchange rate. The Smooth Transition Regression (STR) results also show the expected reaction from the exchange rate following changes in oil prices. Thus, we conclude that oil price fluctuations lead exchange rates movement in Nigeria.Item Responsiveness of Nigeria's Short-Term Interest Rates to Changes in the Policy Rate(Research Department, Central Bank of Nigeria, 2014-09) Tule, M. K.This paper appraises the efficacy of the Monetary Policy Rate (MPR) as an anchor for other short-term interest rates in the economy. Adopting the vector autoregression approach, the responses of Nigeria's short-term interest rates to changes in the interbank rate (proxy for MPR) was modeled. The paper found that the pass-through from MPR to money market interest rates in the long-run is higher for the prime and lending rates than for changes in the Treasury bill rate and 3-month deposit rate. Overall, there seemed to be an asymmetric impact with an increase or fall in the interbank rate.Item Responsiveness of Nigeria’s short-term interest rates to changes in the policy rate(Central Bank of Nigeria, Research Department,, 2014-09) Tule, M. K.This paper appraised the efficacy of the Monetary Policy Rate (MPR) as an anchor for other short-term interest rates in the economy. Adopting the vector autoregression approach, the responses of Nigeria's short-term interest rates to changes in the interbank rate (proxy for MPR) was modeled. The paper found that the pass-through from MPR to money market interest rates in the long-run is higher for the prime and lending rates than for changes in the Treasury bill rate and 3-month deposit rate. Overall, there seemed to be an asymmetric impact with an increase or fall in the interbank rate.Item A test of the fisher effect in Nigeria(Central Bank of Nigeria (CBN), Research Department, 2014-06) Tule, M. K.; Okpanachi, U. M.; Adamgbe, E. T.; Smith, S. E.The “Fisher Effect” has stimulated enormous research interest, especially in monetary policy. Expectedly, empirical evidence has varied greatly – from absence of effect to strong effect. This has kept the debate alive, with the benefit of fresh policy-relevant insights and clues especially in developing countries where the literature on the subject is fast growing. This paper contributes to the debate by using the state space model to investigate the dynamic relationship between real interest rate and inflation in Nigeria. The paper reveals varying degrees of effect across interest rate and time horizons.