Do real exchange rate changes have symmetric or asymmetric effects on trade balance in Nigeria? Evidence from Non-linear ARDL Model

This paper investigates the asymmetric impact of real exchange changes on trade balance in Nigeria using quarterly data over the period 1999Q1-2017Q4. A non-linear Autoregressive Distributed Lag (NARDL) proposed by Shin et al ( The ndings show that real exchange change have asymmetric impact on Nigeria's trade balance in both time horizons. Specically, the positive real exchange rate is highly sensitive to trade balance than the negative real exchange rate. These ndings therefore suggest that using discretionary monetary policy to oset Nigeria's trade decit due to large dierential between import and export is not su cient enough. Thus, policy makers should adopt policy-mix to manage the current economic climate of the country such as imposition of quotas on certain imported goods, high tari rate on imported goods, provision of credit facilities and higher tax rate that reduce disposable income of consumer.