TRANSMISSION MECHANISM FROM EXCHANGE RATE TO CONSUMER PRICES IN NIGERIA
Journal Title: European Journal of Business and Social Sciences - Year 2015, Vol 4, Issue 3
Abstract
The paper seeks to establish the transmission mechanism from exchange rate to consumer prices in Nigeria using a recursive vector autoregression (VAR) model. It uses data from first quarter 2000 to fourth quarter 2013.The impulse response results show that exchange rate depreciation is transmitted to consumer prices through a decrease in the final goods and services that are supplied from foreign countries and through an increase in net exports and aggregate demand. The exchange rate depreciation is not transmitted to consumer prices through an increase in the price of the capital goods imported by the manufacturers as inputs. The impact of exchange rate depreciation on consumer prices will be reduced if more capital inputs are imported for the production of the final goods and services in Nigeria.
Authors and Affiliations
Mathias A. Chuba| Department of Economics, Faculty of Social Sciences Kogi State University, Anyigba, Nigeria E-mail: machuba50@gmail.com
Keywords
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- EP ID EP10605
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