THE IMPACT OF EXCHANGE RATE ON SECTORAL OUTPUT GROWTH IN NIGERIA

ABSTRACT

The one period lag of LAGRS explains that a one percentage increase in previous period level of sectoral output as measured by LAGRS will increase agricultural sectoral output growth by about 8%. However, this relationship is not significant at any level of significance. However, at lag 2 of AGRS shows that a percentage increase in the level of sectoral output measured by LAGRS will decrease agricultural sectoral output growth by 23% and it is significant at 5% level. The coefficient of LEXR at -0.036 entails that a percentage increase in LEXR will decrease LAGRS by about 3.6% yearly, although this is not significant even at 10% level. However, it is significant at the 5% level of significance at lag 1, 2 and 3. In the short run of model 2, Only LEXR (log variable of exchange rate) is found to significantly affect the level of sectoral output growth proxied by MFGS at 10% level of significance. The result shows that a percentage increase in LEXR will lead to a decrease in the level of manufacturing sector output growth by 1.3268%.