Assoc. Prof. Orobosa A. Ihensekhien (PhD), Georgina Okpoa Asemota (PhD), Miedideke Odoni


This study examines the impact of external reserves on economic growth in Nigeria. Alongside external reserves, other explanatory variables used in the study are exchange rate, inflation rate, and trade openness. The data employed were culled from several issues of the Central Bank of Nigeria's annual reports and statistical bulletins covering the period 1986-2020.The paper utilized autoregressive distributed lag (ARDL) model to explore the contemporaneous dynamics for the short and long-run approaches. Descriptively, the study observed that economic growth rate and external reserves witnessed fluctuations with the latter being relatively more pronounced. Specifically, the study revealed that in the long run, all the explanatory variables were key determinants of economic growth in Nigeria. However, in the short run economic growth was observed to be significantly and positively responsive to changes in external reserves, inflation rate and a one-period lag of GDP contrary to its negative response to changes in the exchange rate. The paper, therefore, recommended that the Nigerian government should have a deliberate policy to boost her external reserves, maintain a stable exchange rate policy and also try to achieve a tolerable low inflation rate.


Economic growth, External reserves, ARDL, Trade Openness, Exchange Rate. JEL Classification: C1, E6, H2

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