Real Exchange Rate, Consumption Expenditure and Economic Growth in Nigeria

• Post by: birpo
• February 17, 2026
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Ugwu, Ogochukwu Pamela¹  &  Israel, Godsent Ijeoma Ph.D.²

Abstract         

This study examined the exchange rate, consumption expenditure and economic growth in Nigeria from the periods of 1986 to 2023.The objectives of the study were to investigate the impact of exchange rate on economic growth and determine the impact of exchange rate on household consumption expenditure,  The variables used in this study are growth rate of Gross Domestic Product, exchange rate, nominal interest rate, oil price, government debt and broad money supply, food price, and inflation inertia. The model used in this study is the Classical Linear Regression Model. The model was chosen because of its Best, Linear, Unbiased Estimator (BLUE). The results of the unit root test showed that all the variables were integrated of order onen I(1) except the growth rate of the Gross Domestic Product (GDPgr), Interest rate, broad money supply (M2) and exchange rate regime (DEXCHREG). Johansen co-integration test results using trace statistics and maximum Eigenvalue showed absence of co-integrating relationship among the variables used in the model. The key findings from the study showed a positive relationship between exchange rate and economic growth in the long-run. It was also found that exchange rate had a positive and significant impact on household consumption expenditure within the period under investigation.

Keywords: Exchange Rate, Economic Growth, Household Consumption Expenditure, Nigerian Economy, Gross Domestic Product Growth.