The investigation of the relationship between exchange rate volatility and other macroeconomic factors raises concerns for Nigeria's economy today, given the role of the exchange rate. The Autoregressive Distribution Lag (ARDL) model was employed to analyse the interest rate, inflation rate, economic growth, and trade balance of the macroeconomic variables and to identify their effect on Nigeria's economic growth. Additionally, the mean and variance patterns in exchange rate volatility were captured for effective examination of how shocks and policy changes affect GDP over time. The study revealed that some of the variables have a considerable short-term and long-term impact on the growth of the economy particularly, coefficient of -0.0106 and p-value of 0.0048 for GDP implies a negative effect of past GDP on current GDP, inflation with coefficient of 0.0006 and p-value of 0.7023 showed a positive but insignificant effect on GDP, interest rate coefficient of - 0.0364 and p-value of 0.0004 suggested a negative impact on GDP, exchange rate with a coefficient of 0.0168 and p-value of 0.0778 was positively associated with economic growth, and trade balance with a coefficient of 0.0052 and p-value of 0.0424, showed a positive, significant short-term effect on GDP. In conclusion, this work provided empirical facts and guidance for the stakeholders for effective planning, and recommends that monetary and fiscal policies should be given attention.
Moses et al. (Wed,) studied this question.