Management of external reserves and economic growth in Nigeria

Abstract

Despite the management of the Nigerian external reserves to support output over these years, the economic growth rate has not been improved. The study source data from the Central Bank of Nigeria Statistical Bulletin for real gross domestic product for economic growth as the dependent variable against external reserves rate, exchange rate and total exports rate that represented the explanatory variables from 1985-2019. The study adopted the Augmented Dickey-Fuller and the Ordinary Least Squares for the analysis. The results were stationary at first order differenced levels. The Johansen cointegration test indicated two co-integrating equations in long run. Further, the short run least squares results revealed that external reserves rate, and exchange rate had a positive but not significant, while total exports rate had a positive and significant relationships with the Nigerian economic growth. Finally, more innovative means of production to boost Nigeria’s exports and aid exchange rate/reserves management were recommended.