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Article Title:
An Empirical Investigation of the Link between Exchange Rate Volatility and Trade in Nigeria
by Joseph, Afolabi Ibikunle and Akhanolu, Isaac

Abstract:
This study investigates the impact of exchange rate volatility on trade flow in Nigeria. Using annual data for the period of 1970 ? 2009, the study estimates the exchange rate volatility with the use of Generalized Autoregressive Conditional Heteroskedasticity (GARCH). Model testing procedure includes the coefficient of determination, the Durbin ? Watson and the F ? Statistics. Results revealed that an inverse and statistical insignificant relationship exist between aggregate trade and exchange rate volatility in Nigeria. The study therefore recommends that monetary authority should ensure transparency in the process for determining exchange rate such that various economic distortions associated with exchange rate might be minimized. With this in place, there will be free air for trade flows into Nigeria, which eventually will lead to the growth of the economy.

Keywords: exchange rate, volatility, trade flow, heteroscedasticity and autoregressive

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