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THE DETERMINANTS OF FOREIGN RESERVES IN NIGERIA

Topic Description

TABLE OF CONTENTS
Title page ………………………………………………………………………. i
Approval page ……………………………………………………………………… .. ii
Dedication …………………………………………………………………….. … iii
Acknowledgement …………………………………………………………………….. … iv
Abstract …………………………………………………………………….. … v
Table of contents …………………………………………………………………….. … vi
CHAPTER ONE: INTRODUCTION………………………………………………………….. … 1
1.1 Background of the Study …………………………………………………………………….. … 1
1.2 Statement of the Problem……………………………………………………………………… … 7
1.3 Objective of the Study …………………………………………………………………….. … 8
1.4 Statement of the Hypothesis………………………………………………………………….. … 9
1.5 Justification of the Study …………………………………………………………………….. … 9
1.6 Policy relevance …………………………………………………………………….. … 9
1.7 Scope of the Study ……………………………………………………………………. … 10
CHAPTER TWO: LITERATURE REVIEW………………………………………………. …. 11
2.1 Theoretical literature ……………………………………………………………………. …. 11
2.1.1 Revived Bretton Woods System and Export Promotion………………………….. … 11
2.1.2 Precautionary Motives …………………………………………………………. …. 11
2.1.3 The Monetarist or Classical Views…………………………………………………… …. 12
2.1.4 Keynesian View on International Reserves………………………………………… … 13
2.1.5 A Three-Period Model of Optimal Reserves Allocation ……………………… 14
2.2 Empirical Literature ………………………………………………………… 14
2.3 Limitations of Previous Studies…………………………………………………….. 20
CHAPTER THREE: METHODOLOGY………………………………………………….. 23
3.0Monetary Approach to Balance of Payments and Exchange Rate Determination……… 23
3.1 Model Specification ………………………………………………………………. 25
3.2 Pre-Estimation tests ………………………………………………………………. 30
3.2.1 Unit-Root test ……………………………………………………………… 30
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3.2.2 Cointegration test …………………………………………………………… 30
3.3 Statistical tests ……………………………………………………….. 31
3.3.1 R2 ……………………………………………………….. 31
3.3.2 The t – test ……………………………………………………….. 31
3.3.3 The F – test ……………………………………………….. 31
3.4 Econometric Procedure (Tests) ……………………………………………….. 31
3.4.1 Test for Multicolinearity ………………………………………………………… 31
3.4.2 Test for Autocorrelation ………………………………………………………….. 31
3.4.3 Test for Normality ………………………………………………………. 31
3.4.4 Test for Heteroscedasticity ……………………………………………………… 31
3.4.5 Regression Specification Error Test…………………………………………………. 31
3.5 Data ………………………………………………………….. 32
3.6 Definition of Model Variables ………………………………………………………. 32
CHAPTER FOUR: EMPIRICAL RESULTS……………………………………………… 35
4.1 Presentation of Battery/Pre-Estimation tests……………………………………………. 35
4.2 Presentation of Regression Results …………………………………………….. 36
4.3 Evaluation of Results ………………………………………………….. 38
4.3.1 Economic (A Priori) Criteria ………………………………………………. 38
4.3.2 Statistical Criteria ………………………………………………. 39
4.4 Econometric Procedure (Tests) ……………………………………………… 42
4.4.1 Test for Multicolinearity ……………………………………………… 42
4.4.2 Test for Autocorrelation ………………………………………………. 44
4.4.3 Test for Heteroskedasticity …………………………………………….. 45
4.4.4 Normality Test …………………………………… 45
4.4.5 The Specification Error Test ……………………………………………… 46
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4.5 Evaluation of Working Hypotheses ……………………………………………….. 46
CHAPTER FIVE: SUMMARY, CONCLUSION AND POLICY IMPLICATIONS……. 50
5.1 Summary ……………………………………………………. 50
5.2 Conclusion …………………………………………………….. 51
5.3 Policy Implications/Recommendation …………………………………. 52
REFERENCES ……………………………………………………. 54
APPENDIX

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