DQ1 Comments NM and DQ Comments ST Assignment Example | Topics and Well Written Essays - 250 words

DQ1 Comments NM and DQ Comments ST - Assignment Example The federal government should create a universal health plan that provided service to all 310 million Americans. A non-profit organization should target athletes, movie starts, the doctors, and entrepreneurs that have income of over $250,000 a year. They would donate 20% of their net income to help finance the medical needs of uninsured people. DQ2) I agree with you that Mr. Hill violated his fiduciary duties. Companies can not use the money from one business to finance the operations of a separate business. Both companies are separate legal entities. He was so corrupt that he used his money to pay for expenses of his wives business. Illegal wire transfers of money were occurring on a recurrent basis. The owner had the board of directors on his pocket. They were like puppets brainwashed by Mr. Hill. The IRS should have been able to detect this fraud sooner because these people deserved jail time for their fraudulent financial activities. SEC regulations and the Sarbanes-Oxley Act were violated in this scenario. Section 404 of Sarbanes-Oxley was violated in this case study. SOX Section 404 mandates that all publicly-traded companies must establish internal controls and procedures for financial reporting and must document, test and maintain those controls and procedures to ensure their effectiveness.† (Searchsecurity,

Consumerism and Fashion in Singapore

Consumerism and Fashion in Singapore Everlasting consumerism has shaped the way 21st century landscape looks like. It creates unlimited demand of products and stores in any possible space. Retail design is responsible to convert this possible space into a consumerism space. It is where people encounter strong force to see and buy products. A perfect example to show evidence exists in fashion world. There is strong indication of tense competition happens between clothing manufacture to win the market. In relation to that, the store has become one key aspect or rather a strong statement to create brand awareness among public. The question arise is how, in a relatively over-saturated market, a store can be possibly designed to convey strong message to draw the crowd of consumerism into the space. 1.1. Consumerism Today The idea of consuming has changed over the past decades. Back to the early human civilization period, most of the activities were needs-driven actions. Earlier, as hunter gatherer, human hunted animals to be able to eat. Followed by agricultural period, farming and plant cultivation were done to produce their food. Consuming was a mere activity that must be done in order to survive. In Industrial and technological age, the way people consume things has changed. As more diverse product being produced and diverse ways of distribution being invented, there are pleasure factors of consuming in form of choices. People find excitement in choosing what they want to consume. This leads to modern consumerism where the concept of consuming goes beyond the needs of survival. 1.2. Shopping as Modern Consumerism Shopping is the 21st centurys representation of human consumerism. People find delights surrounded by range of different shops and brands. To be able to choose and compares is the highlight of modern life consumerism. In forms of choosing, buying, and using, shopping has catered these needs. Shopping can be seen as in a positive way of fulfilling peoples needs and wants. But apparently, it has developed so fast, in terms of activity, space, and products. And over the past decades, it becomes major aspect in human life. Museums, libraries, airports, hospitals, and schools are becoming increasingly indistinguishable from shopping. Their adoption of retail for survival has unleashed an enormous wave of commercial entrapment that has transformed museumgoers, researchers, travelers, patients, and students into customers (Koolhaas cited in Luna, 2005, p.26) Shopping is arguably the most universal activity nowadays. The way designer design space has to follow this idea as well. Space has to be designed in such a way to accommodate this, to enable people to shop anywhere, anytime. 1.3. The Existence of Fashion Retail Fashion retail perhaps is the best example to portray the modern consumerism. It shows how people eagerly choose what they wear under the spotlight of diverse fashion brands. If the case is taken to a higher level, it demonstrates obviously how people decisions are led by choice instead of needs. High class fashion brands such as LMVH, Gucci, and Prada exist to serve beyond peoples demand of clothing. They meet peoples desire for choices for range of luxury products. 1.4. Fashion of Singapore Singapore cityscape pictures clearly the existence of international fashion brands. They, indeed, has become one strong attraction point of Singapore for both local costumers and tourists. Singapore is one of the main competition arenas for these giant fashion brands in Asia. To be able to meet customers demand, every brand has to come up with high-end design for its retail. Design and technologies are optimized in its use to boost the shopping experience that lead to brand awareness. All these things have to be done so that people will choose certain brand and not others. Orchard Road is a good example depicting the competition among these brands. Interior design, facade treatment, display technologies are being optimized to attract pedestrians along the road. 2. Retail Rebirth People find pleasures in choosing what they want. Retail has two different approaches in response to the demand. Firstly, they must be able to provide a range of products for customers to choose. Secondly, the retail itself subject to competition. That means it is also considered one of so many choices in the market. In this matter, the retail has to prove to the market that it is worth chosen. The brand, the products, and the store has to work together to stand out and creates strong awareness in the marketplace. Retail has to rebirth, leaving old conservative way of promoting brands, and creating fresh interaction between products and customers. 2.1. Brand Manifestation With a strong competition in the fashion market, a strong distinctive image of a brand is required to create public awareness. The case is not only competition among products but also continues to the environment where the products being promoted. At this stage, a store has become key tool for the brand to create its images. A flagship store is designed to represents the identity of the brand indeed. For new customers, the store become the first things that attracts them before they go further down to the products being offered or even before they see the window displays. 2.1.1. Design for the Brands Architecture and interior design are responsible to create environment to deliver products to customers. Fashion retail, regardless of style, trends, or brand identity, should be able to create customer awareness and stimulate them to come and choose it instead of other shops. This is the fundamental function of retail design before it goes down into a deeper and more specific case-based function. On higher level, the architect or interior designer must understand the nature of fabric and how individual fashion designer, that is being represented, has their personal technique to treat it. This unique quality is the one that gives character to a brand. The character, then, must be translated into the space in order to create strong statement of the brand. 2.1.2. Emphasizing Character In order to be distinctive in an over-crowded market, a strong character of the brand is required. This character is projected from the way the brand carry itself to the market. It consists of range of products and service being offered, and the environment of where the commercial activities take place. Retail design has to be able to create the atmosphere that bridge customers and products. The store acts as a package and shelter, literally and metaphorically, to the brand. The character will only be emphasized if there is unity between the brand, the product, and the store. 2.1.3. Characterizing Structure A store as a physical shelter might be more than enough to envelope the commercial activity happening under it. But in fashion world, it goes further than functionality. More than just a place to display the product and providing circulation for people to walk and browse the product, the retail has to relate itself to the product and the company philosophy. In other words, the store has to establish relation, in form and purpose, with the clothes. The physical structure, that provide commercial environment, has to blend in with the clothes and create overall unity. Only by this way, the customer will see the bigger picture of the brand, and not loose pieces of the brands. One ideal example of harmony between brand and store is shown in Calvin Klein store located in Avenue Montaigne, Paris. Its store, designed by John Pawson in 2002, made a good illustration of how the character of the clothes -especially the early Calvin Kleins work- has been translated into the retail space. (Klein) has said It s important not to confuse simplicity with uninteresting, and executes his simplified, refined, sportswear-based shapes in luxurious natural fibers, (Stegemeyer, 2004, p.130) It is the idea of simplicity that is consistently conveyed through the brand, products, and store. Straight lines and clear space sequences brings out the clarity of the clothes, creating a clean and subtle ambiance of the store. The desired simplicity atmosphere is reinforced through neutral colour that is achieved by materials and lighting installation. 2.2. Design Distinction A character manifestation to a space is inevitability essentials to create strong brand awareness. However, regardless of the brand that is being represented, fashion store can be distinctive by itself. It is a second step after establishing strong representation of the brand. This is about different approach from the experience side, exploring the interaction between products and customers in a conducive controlled environment. In other word, it redefines the way people shop inside a store, creating a fresh shopping experience. 2.2.1. New Fashion Stores Fundamental With Singapore landscape that has been over-crowded with shopping malls and retail stores, the creation of retail store should be more carefully considered. When the market is driven by consumerism, the rate of retail formation will continue to rise up. However, any retail creation should consider avoiding similar addition to the existing scene that might create saturation to market. It is a strategy to evade the similarity and, at the same time, open up a chance to stand out in the marketplace. To address the issues, the store must cater certain factors in its design approach in spite of the brand it conveys. 2.2.2. Flexible Frequent Space Retails should be able to update themselves frequently. It has to be able to adapt to new products, seasonality, and customer trends. There is a high level of experimentation in retail design. It relates to fashion, and fashion changes constantly, is surprising and wants to create experiences (de Wild, 2009, p.14) In advance level, apart from the temporary things, it has to change in order to create different interaction between customers and product in each encounter. In other word it needs to shift, not just in terms of layout, but in a bigger store scheme. By applying this concept, it is not only the window displays that change every time new products are launched, but the whole store represent the display that able to change entirely. The idea can be achieved by applying modular system for the furniture, placing digital multimedia interface, using less heavy fixed display furniture, and installing replaceable lighting systems. 2.2.3. Centre of Social Activities The new concept of retail store is not merely about catering commercial activities -selling, advertising, and buying. It is to incorporate retail space and communal space to be a social meeting point. With the global trend of privatization, I think we are most interested in the idea of shopping as a new kind of public space. How can we enrich these experiences? Can we bring new content, information, ideas and visual experiences to shopping in a thoughtful and dynamic way? (Seller, 2009, p. 23) The idea is to facilitate people do many other inspiring activities in their shopping time. This idea can be done by open-space concept store, creation of different communal spaces inside the store, and even distribution between product display and decorative items -plants, resting furniture, etc. The ideal integration of social space and commercial space is when people are able to rest and relief without any pressure to buy while they are unconsciously take pleasure in the products and tempted to buy. 2.2.4. Cultural Relevance Local relevancy is important to make a store appears hospitable. Establishing relation with the local culture is crucial to relate the global brand to smaller local market. Selling products is not about bombarding potential customers with the global products. Instead, it has to be relevant to the context and understand local customers. This can be manifested through adaptive re-use of local landmark as retail space, renovation of historical aged building, and design fusion between brand character and local culture. The new concept store is about being able to combine the attractiveness of the brand with local taste to create strong invitation and also sense of belonging to customers. The design approach mentioned above can be applied into a store regardless of brands and products. The purpose is to create new way of shopping. Back to the statement earlier where people find satisfaction to be able to choose, it is how the choosing activity can be more valuable and rich in experience. When this approach merged with the brand character, it becomes a holistic package that convey strongly to the marketplace. The mission is accomplished when people find delight in choosing and be able to trustfully choose the brand. 3. Conclusion The consumerism-driven market will make people enthusiastically choose the products they want. With an over-saturated market in Singapore, an unconventional design is required to for a fashion retail to be distinctive and thus, win the market. Firstly, the store has to manifest the brand that it represents. The store design must convey the brand and products philosophy to create holistic picture and strong brand awareness. Secondly, in terms experience, it must create refreshing and enriching way of shopping. In attempt to achieve the experience, store needs to be designed with consideration of three approaches (flexible frequent space, center of social activities, and cultural relevance). The new retail store requires constant changing in order to provide up to date shopping experience for customers. A store has to be a social assembly more than a commercial place, providing a tranquil customer-oriented atmosphere. Additionally, it is necessary for a store to have a connection with local context and create a sense of belonging in customers mind. Bibliography Antonini, Alessandra. 2008. Design Boutiques. Barcelona: Links Design Council, 2009. Retail Design. [Online] (Updated 26 Oct 2008) Available at: http://www.designcouncil.org.uk/About-Design/Design-Disciplines/Retail-Design/ [Accessed 17 January 2010] de Wild, Femke. 2009. Retail Future. FRAME. Issue 69, Jul/Aug, p.14. EnterpriseOne, 2009. Recent Retail Trends Future Developments. [Online] (Updated 01 Jan 2010) Available at: http://www.business.gov.sg/EN/Industries/Retail/StatisticsNTrends/FactsFiguresNTrends/retail_overview_trends.htm [Accessed 12 January 2010] Harvard Design School. 2001. The Harvard Design School Guide to Shopping. Cambridge: Taschen Pawson, John. Calvin Klein Store Paris [Photographs][Online] Available at: http://www.johnpawson.com/architecture/stores/calvinklein/paris [Accessed 5 April 2010] Luna, Ian. 2005. Retail. Architecture + Shopping. New York: Rizzoli Manuelli, Sara. 2006. Design for Shopping. London: Laurence King Mostaedi, Arian. 2004. Cool Shops. Singapore: Page One Pawley, Martin. 2000. Fashion + Architecture. London: Wiley-Academy Riewoldt, Otto. 2000. Retail Design. London: Page One 2002. Brandscaping. Berlin: Birkhauser Sellers, Susan. 2009. 24, Inc on interview with Idn. Idn vol 15 number 6, pp.22-23. Singapore Department of Statistic. 2009. Yearbook of Statistics Singapore. Statistics Singapore [Internet] (Updated 13 Aug 2009) Available at: www.singstat.gov.sg/pubn/reference/yos09/yos2009.pdf [Accessed 10 January 2010]. Stegemeyer, Anne. 2004. Who s Who in Fashion. New York: Fairchild Publication.

Cognitive Effects of Early Bilingualism Essay -- Bilingualism, Consequ

The American educational system has fallen behind other leading nations in the world in many respects, one of which is in bilingual instruction. This has traditionally been overlooked in the United States until the high school level. American children should be better prepared for the growing globalism and technological advances instead of losing educational opportunities due to lack of foresight. One necessary step is to introduce second language acquisition earlier in the education program. In addition to purely economic reasons, the positive effects to the cognitive development of the brain when introduced to a second language are many. The age of acquisition is crucial due to the plasticity of the brain which, according to the critical period hypothesis, begins to plateau after five years of age(Bialystok, 2012). The current policy in early education limits greatly the amount of extracurricular lessons provided in accordance with government policies such as No Child Left B ehind, which restricts school funding based on standardized testing only in certain subject areas. School programs, realistically beginning in elementary education, should include foreign language study due to the strong evidence that bilingualism in children can develop higher cognitive abilities which can be enhanced with proficiency and positively influence skills in other areas. Old arguments suggest that, â€Å"children who are instructed bilingually from an early age will suffer cognitive or intellectual retardation in comparison with their monolingually instructed counterparts† (Diaz 24). Much of the research from the past supporting this argument focused on older bilinguals, mostly adults who may have shown competent abilities in a second langu... ...pact of Bilingualism on Cognitive Development.† Review of Research in Education 10 (1983): 23-54 Dijkstra, Ton. â€Å"Task and Context Effects in Bilingual Lexical Processing.† Cognitive Aspects of Bilingualism (2007): 213-235. Garcia-Sierra, Adrian, Randy L. Diehl, and Craig Champlin. â€Å"Testing the double phonemic boundary in bilinguals.† Speech Communication 51 (2009): 369-378. Kovacs, Agnes Melinda. â€Å"Beyond Language: Childhood Bilingualism Enhances High- level Cognitive Functions.† Cognitive Aspects of Bilingualism (2007): 301-323. Mechelli, A., Crinion, J. T., Noppeney, U., O’Doherty, J., Ashburner, J., Frackowiak, R. S., and Price, C.J. 2004. Structural plasticity in the bilingual brain. Nature. 431: 754. Siegal, Michael, Laura Iozzi, and Luca Surian. â€Å"Bilingualism and conversational understanding in young children.† Cognition 110 (2009): 115-122.

Rational Choice Theory Human Essay

Kidnapping John was an ordinary struggling employee of a newspaper firm. One cannot tell by appearances what the mind is capable of, or is it situations that can arouse criminal intelligence in any one of us. However, it is when thoughts transform into actions that crime is committed and what is it that causes this transformation: opportunity. Crime Script John sat thinking of possible options. It has been a mistake to switch two jobs in three years. Not only did he not have a decent designation, he barely made enough to sustain himself, let alone repay the $4000 loan installments. Mr. Woolmar, the Boss, did not even know his full name properly in the six months that he had worked, let alone give him any financial help. He would have to do something drastic, something quick and maybe even something illegal. And it would have to be alone. Nothing in office, there were too many cameras. The next-door neighbours just had a baby†¦ kidnapping? Yes, but not a baby. Rob someone, take their cash, ATM, and car. Parking lots are good for that, no police, and hardly any public to get alerted and call 911. Yes, parking lots, that is where most crimes are committed, at least in the movies. Resources and setting up John required first of all, a gun. The only person whom he knew had a gun was his colleague, Sarah, who after attempted burglary at her residence had obtained an official permit to keep a gun for self-defense. He mentioned having to write an article on gun engineering and asked if he could borrow it for a few hours†¦office time only. He would take it at twelve ‘o clock, study the components, and return it at five before she leaves for home. Sarah, as her permit allowed her to carry the gun on her person, bought it to office the next day. All he cared about was that it was small in size, not too visible in his coat. Could have been a toy gun, some do look scarier than the real thing. The mask was cut out of a ladies polo neck shirt that he had bought at Labels yesterday, two holes for the eyes, a little slit for breathing and one for talking. Black, and cotton, he did not want the stifling nervous feeling to make him faint. A sports bag, to carry everything and sports gear, to look like: ‘I have just left gym and an going home. ’ This disguise also allowed him to wear joggers, which made less noise as he approached. Another factor that made him soundless was the linoleum floor of the parking lot. Linoleum is especially designed to absorb noise and shock from car tyres so that parking lots are serene. Little did floor manufacturers know how this ‘benefit’ would transform into a security hazard. He had also chosen a parking area that is mostly vacant during office lunch hours. A block away from his office was Hallman’s Securities: home to few of the richest brokers in the city. These were people who had it all and more. For them, a few thousand dollars amiss would not matter. All this was information gained from his very own newspaper articles. Actors and doing it As soon as it was One, John changed into his sports gear in the restroom, signed out ‘Gone for lunch’ walked two blocks down and started jogging as he approached the parking lot. A few stretches and he even smiled at a few lady lawyers walking out with their coffee flasks who waved back distracted. Most cars he had noticed parked in the morning, as he had stopped on his way to office, were not there. The red BMW was missing, it had particularly caught his attention because of its shine. The guard on duty was nowhere to be seen, lunch hours for everyone, hopefully. He continued with his stretches and hoped for the gentleman who had parked his Vitz at exactly 8:45, at the other end, to come out after a few more minutes when the movement died down. And there he was, navy blue shirt, maroon tie, grey trousers and the salt and pepper hair. Not really elderly enough to make John feel guilty, more of a younger wealthy CEO variety. John could now understand ‘rob the rich, give to the poor. ’ Ducking under the fichus undergrowth, John quickly put on his mask and sprinted to the other end. The gentleman nonchalantly put the keys in the lock, the rustling of leaves in the wind providing further cover to Johns hurried arrival. It was only â€Å"I have a gun, do as I say! ’ that made him stop, stiffen and put his hands up. â€Å"Get into the car, fast, don’t look back! † and John crouched low in the back seat. Once in the car, he could talk more, explain his situation, now that the gun was out of the view. â€Å"Give me your wallet, watch, and anything else that you are carrying! And you had better not hold anything back or else†¦ † said John as he poked the nozzle into his ribs. But the white-faced man was too shocked to comply. â€Å"Can’t you hear me?!! † and the second jolt startled his poor victim into action. John felt like an actor in a play. He had to force the ruthlessness into his voice; it was not coming naturally. Maybe that is how all criminals feel the first time. He wished he had not started this, but it was too late now, he had started committing the offence, might as well go all the way and reap the reward. At least he could thank his oratory skills for not fumbling with the words or faltering in volume to give away his own apprehensions. â€Å"Now you have to drive to the nearest ATM, NORMALLY, smile at people as they pass, NO ONE MUST SUSPECT, YOU UNDERSTAND! † said John, and the car started. Both the villain and the victim were on auto-pilot, like a robot drove the grey-haired man, knowing exactly where to turn, to stop at red lights, stare straight ahead, not looking here or there. John kept his gaze and nozzle fixated at his victim, ignoring the need to look around lest he give away the game. It was a slow mechanical drive. The car stopped at the ATM. It was one of those booth varieties. â€Å"I will wait outside† said John. â€Å"Take out your maximum and be out in two minutes, or I will come and shoot you inside. † Those two minutes seemed like eternity. John kept looking at his watch. What if the man had two cell phones, and had given John only one. What if he will look up the window and see a blue uniform holding a gun at him? A girl passed by the pavement, oblivious of everything except the tune in her I-pod. Then he heard the thud of the booth and saw a flash of Navy blue. Alerted to his teeth, he only breathed as he realized it was his fellow, not the cops. The man turned around and handed the cash. â€Å"That was all the limit allowed. † Silence as John counted the nine hundred and fifty dollars. Add that to the six hundred in the wallet, the five hundred the Tissot would go for, John realized that he would have to execute Part B of the plan, steal the car. Anyway it would be better to have the car to drive off in than to have to disappear from the crime on foot. â€Å"Drive and stop where I tell you! † China town was what John had in mind, there were less phone booths and more Chinese than American in that area. It would take longer for an American to get help there than anywhere else in New York. Jumping onto the passenger seat, John shouted’ â€Å"Get Out! † at the back alley. Yanking the mask off and driving at full speed John neither looked left or right as he speeded to the little repair shop run by the Mexican who had repaired the almost falling-apart foxy belonging to his Indian friend, Ranjeet. That was the only place he had ever seen a shady deal done, when suddenly a brand new Volvo was deposited by two high schoolers who walked away with cash in their pockets and smiles on their faces. The economic and emotional decadence that had disgusted him then, seemed so all right and understandable now. A crime does not feel like a crime if your needs are greater than the needs of your victim. Here too, the actions seemed rehearsed. Stop the car near the garage, walk inside, but a cigarette and open the packet to find the 4 smokes and the amount the Mexican feels is appropriate for the new arrival. Which was appropriate for John as well: A full two thousand and five hundred dollars. He may even give four hundred to charity to wash away his sin. He was just waiting for a taxi as he saw the Vitz being slowly pushed into the repair shop and the gate being closed. A few directions to the Indian cab driver, a speedy drive to office, a rush to the restroom where John changed back into his office attire, leaving the clothes and joggers in the huge trash bin, John was back at his desk at 2:15. â€Å"Rather early lunch? Was it a date? † asked Bob, his colleague â€Å"Yeah, sort of† said John as he finished formatting the article on why it is dangerous to polish guns on your own inside the house. â€Å"Here Sarah, thanks a lot, how do u use this thing? † Rational Choice Theory Human beings are rational creatures. That is why God created heaven and hell. We make the right choices there, because God is always watching. But cops are not always watching, so it is possible for would-be criminals to get away with a lot of things since â€Å"where there is a will, there is a way. † Crime arises when motivation meets opportunity. One may have the mind but not the means. If crimes such as Johns are to be prevented, either one or both of these factors would have to be reduced/removed from society. Motivation for crimes of financial nature, such as Johns, arises from need. It is not a case of a rich man trying to get richer by swindling the shareholders of his company. It is performing the big crime of kidnapping for a few thousand dollars. As said ‘Rationality involves an end/means calculation† (Sutton). Kidnappers may face lengthy terms in prison. The harsh sentences imposed and the poor risk-to-benefit ratio compared with other crimes have caused kidnapping for ransom virtually to die out in the United States. It may be that John was not aware of the consequences of getting caught. Here the question arises as to what were the violent actions the loan shark had threatened to take, that provoked John to risk something greater. A loan shark, is someone who illegally charges interest over the state’s legal limit, which could range up to, or even over 100% and threatens violence or damage to a person’s reputation. John could have come clean to the local police and requested for security. However, if the motivating factor was damage to reputation, it would have been disastrous for John as his career as a writer in a newspaper. A more comprehensive approach is needed to reduce the incidence of such crimes. The government may need to create public awareness about the seriousness and penalties of committing various crimes so that the law is not taken lightly in times of stress. The underlying problem, however, is economical. â€Å"With the new decade of 2010 upon us, little has changed and further victimizing seems inevitable as financial desperation increases globally in more households† (Sifakis, 1999). The government must crack down on the loan shark system and introduce schemes of credit borrowing from the State itself depending on merit and below market interest rates. In fact, why not without interest at all? Interest has been looked down upon in a few religions of the world because it makes the poor, poorer and the rich, richer. Had John had access to such a borrowing system, he may not have fallen prey to a local loan shark. John’s situation mentions that he has no family or friends. A very often and sad situation in the new American society is the loneliness of the individual. In other cultures, expenses and liabilities are shared by family members especially those living in a joint family system. Such a system also automatically keeps an emotional check and an eye on every member where deviance in behaviour or mood is immediately noticed. Problems are discussed and sorted out. When society becomes individualistic and there is less and less of a support structure, financial and psychological factors combine to breed crime Motivation is all in the mind. But the body acts only if there is an opportunity. If there is a situation in which the crime can be performed. John chose not to rob a bank because he did not have access to professional assistants. John chose not to defraud his employer because he lacked the IT expertise and there were surveillance cameras in office. He had the motivation for both of these, but did not have the opportunity so the crimes were not committed. Therefore the government needs to focus on situational crime prevention. This includes making public areas safer for people. Parking lots and parks often get deserted. More surveillance cameras must be installed. Security guards must be employed in shifts. Criminals commit crime mostly because they think they will not get caught. A general awareness of crime prevention must be installed in society. Situational crime prevention does not mean obtaining permits for guns. The more guns there are out there, the more the chances of anyone getting hurt. Obviously a gun is made to kill. One in ten will. The danger of it falling into the wrong hands is too great. Guns get jammed and fire at the wrong times. There have been numerous deaths around the world because of guns kept at home. Another factor in urban crime prevention is to assimilate the various ethnicities of a metropolitan into the community whole-heartedly. â€Å"Immediate steps can be taken to reclaim the urban environment and recreate a sense of community. Migrants in multicultural cities, who have internalized the culture conflict between two worlds, can be assisted in gaining new identities and allegiances† (United Nations Team, 1995). Poverty-stricken, derelict areas on the outskirts of metropolitans are like breeding areas or crime ports, where goods can be deposited, sold, purchased out of need but always with a racial revenge in the subconscious. In John’s case the Mexican was a character, which symbolized this mafia. If at the end of his crime, John did not have a place to sell the Vitz, the crime may not have arisen at all, since no one would be carrying four thousand dollars cash anyway. The crime had not been completed until John sold the car. The victim had time to contact the authorities. However, in such situations a victim’s reactions are often late especially if the aggressor is strong or loud. While the victim was inside the ATM booth he could have looked into the CCTV camera and made signs to indicate his situation. A compulsory self-defense course must be introduced at all private and public schools so that victims are at least able to respond for help at the right time and place. This would ensure a lot of criminals being taken off guard. After a crime is committed, it is the States responsibility to punish. â€Å"The Swiftness, Severity, and Certainty of punishment are the key elements in understanding a law’s ability to control human behavior† (Keel, 1997). The rational choice theory states that the benefit of the crime is greater than the pain: ‘Choice can be controlled through the perception and understanding of the potential pain or punishment that will follow an act judged to be in violation of the social good, the social contract,† (Lilly, Cullen and Ball, 1995). Whenever a crime attempt is aborted, a criminal punished, the story must flash on the media and be registered into the minds of the public, for human beings learn readily by example. Some societies go to the extent of public floggings and executions, so that all ye may learn. Utilizing the media for the good of the community is a governmental responsibility. The State may do much but it is the power of the people that can also be quite a deterrent to crime. † Self-help schemes have proven highly effective in well-organized communities. Specific crime prevention measures, such as neighbourhood block watches and neighbourhood courts, work best in partnership with local authorities, scrupulously avoiding vigilantism. † (United Nations Team, 1995. ) In many metropolitans, for example in Karachi, citizens have joined hands with the local area police to make their localities / cities safer places to live in; an organization named CPLC (Citizens Police Liaison Committee) with the slogan ‘Lets beat crime together’ has distributed car stickers with phone numbers easily displayed so that anyone who notices anything suspicious may inform it. Conclusion All efforts of the State and citizens alike must be more focused on eradicating ‘the way’ (that is, opportunity) because it is easier to eradicate than ‘the will’ (that is, motivation), which requires a long-term strategy. ‘To err is human† and the devil may open his workshop anywhere but as long as there is no opportunity, crime commission does not occur. The rational choice theory states that motivation and opportunity combine for crime commission. However sometimes motivation is not a factor at all. Even if the State and community are ideal, there are serial killers and psychopaths who commit crimes only because there are opportunities. John had the opportunity to kidnap and commit theft and he would have done it even if he were a serial killer who had a fetish for killing grey-haired men, instead of having been driven to it because of financial problems. Sometimes it is just temptation or the thrill of doing something daring and forbidden, that replaces motivational factors such as poverty or racism. So we may conclude that opportunity of crime can be equal to possibility of crime and though economic and sociological environments must be such that they deter crime, it is more relevant for the authorities to focus on situational crime prevention. References Kopel, D. B. (1995). Guns: who should have them?.. New York: Prometheus books. Keel, R. O. (1997). Rational Choice and Deterrence Theory. Lilly, J. Robert, Cullen, Francis T. and Ball, Richard A. (1995). Criminological Theory: Context and Consequences (2nd ed. ). Thousand Oaks: Sage Publications, Inc. Sifakis, C. (1999). The Mafia Encyclopedia Checkmark Books Sutton, D, Ronald V. Clarke. Retrieved May 17th, 2010 from http://www. criminology. fsu. edu/crimtheory/clarke. htm United Nations. (1995, April). Stop Crime. Retrieved May 17th, 2010, from http://www. un. org/ecosocdev/geninfo/crime/dpi1646e. htm

Strategies for Resuscitating Foreign Exchange Market in a Depressed Economy (a Case Study in Nigeria)

Strategies for Resuscitating Foreign Exchange Market in a Depressed Economy (A Case Study in Nigeria) By Ijaiya Tahir Adeniyi B. sc (Hons) Econs From Lagos State University, Ojo, Lagos State, Nigeria CHAPTER ONE INTRODUCTION 1. 1BACKGROUND OF THE STUDY Exchange rate arrangements in Nigeria have undergone significant changes over the past four decades (Alaba, 2003). It shifted from a fixed regime in the 1960s to a pegged arrangement between the 1970s and the mid-1980s, and finally, to the various types of the floating regime since 1986, following the adoption of the Structural Adjustment Programme (SAP).A regime of managed float, without any strong commitment to defending any particular uniformity, has been the predominant characteristic of the floating regime in Nigeria since 1986 (Alaba, 2003). These changes are not peculiar to the Naira as the US dollar was fixed in gold terms until 1971 when it was de-linked and has since been floated. The fixed exchange rate regime induced an ove rvaluation of the naira and was supported by exchange control regulations that engendered significant distortions in the economy.That gave vent to massive importation of finished goods with the adverse consequences for domestic production, balance of payments position and the nation’s external reserves level. Moreover, the period was bedeviled by sharp practices perpetrated by dealers and end-users of foreign exchange. These and many other problems informed the adoption of a more flexible exchange rate regime in the context of the SAP, adopted in 1986.In theory and practice, a prolonged misalignment of the exchange rate in the foreign exchange market will, in the medium term, tend to impact adversely on economic performance (MacDonald, 1997). Consequently, the authorities should always provide a timely intervention to ensure that the exchange rate is in equilibrium. The monetary authorities usually intervene through its monetary policy actions and operations in the money mark et to influence the exchange rate movement in the desired direction such that it ensures the competitiveness of the domestic economy.In Nigeria, maintaining a realistic exchange rate for the naira is very crucial, given the structure of the economy, and the need to minimize distortions in production and consumption, increase the inflow of non-oil export receipts and attract foreign direct investment. In order to give vent to this, this study shall examine the foreign exchange market in Nigeria with the view of investigating the relationship between the exchange rates and some macroeconomic variables. 1. 2STATEMENT OF RESEARCH PROBLEMThere has been an ongoing debate on the appropriate exchange rate policy in developing countries. The debate focuses on the degree of fluctuations in the exchange rate in the face of internal and external shocks. Exchange rate fluctuations are likely, in turn, to determine economic performance (Kandil and Mirzaie, 2003). In judging the desirability of ex change rate fluctuations in Nigeria, it becomes necessary to appraise the various exchange rate regimes adopted in Nigeria and evaluate their effects on output growth, pattern of domestic prices and some other macroeconomic variables.Their major setbacks would also be identified in order to suggest future course of action. 1. 3OBJECTIVES OF THE STUDY The specific objectives of this study are: i) to Identify the determinants of the foreign exchange rates; ii) to examine the impact of foreign exchange rates on the value of the country’s output; iii) to examine the impact of foreign exchange rates on foreign trade; iv) to examine the impact of foreign exchange rates on external reserve; v) to examine the impact of foreign exchange rates on domestic prices of goods and services. . 4RESEARCH METHODOLOGY The Econometric approach that would be adopted to examine the relevance of the exchange rate in the official foreign exchange market to the economic growth of Nigeria shall be the Ordinary Least Square (OLS) method. This econometric method would be used because it is very reliable and widely used in researches. Simple regression models shall be adopted to capture the effect of foreign exchange rate on economic growth, foreign trade, external reserve and the domestic prices of goods and services in Nigeria.The test of the hypotheses earlier stated would be done at 5% level of significance and as such, the generalization of the study findings would be limited to this extent. Secondary data would be used in this study. The relevant data to be used would be sourced from the Central Bank of Nigeria’s statistical reports, annual reports and statement of accounts for the years under review. 1. 5RESEARCH QUESTIONS The research questions, which would guide this study, are as follows: i) What are the determinants of foreign exchange rates? ii) What has been the impact of foreign exchange rate on the growth of Nigerian economy? ii) How does the foreign exchange r ate impacts on foreign trade of Nigeria? iv) What is the relationship between foreign exchange rate and external reserve? v) How does the exchange rate affects the domestic prices of goods and services in Nigeria? 1. 6RESEARCH HYPOTHESES The research hypotheses to be tested in the course of this study are stated below as: HYPOTHESIS I Ho : That there is no significant relationship between exchange rate and the economic growth of Nigeria. H1 :That there is a significant relationship between exchange rate and the economic growth of Nigeria.HYPOTHESIS II Ho : That there is no significant relationship between exchange rate and foreign trade in Nigeria. H1 :That there is a significant relationship between exchange rate and foreign trade in Nigeria. HYPOTHESIS III Ho : That there is no significant relationship between exchange rate and external reserve of Nigeria. H1 :That there is a significant relationship between exchange rate and external reserve of Nigeria. HYPOTHESIS IV Ho : That th ere is no significant relationship between exchange rate and domestic prices of goods and prices in Nigeria.H1 :That there is a significant relationship between exchange rate and domestic prices of goods and prices in Nigeria. 1. 7MODELS SPECIFICATION MODEL I gdp = a0 + a1 exr + e Where gdp-Gross Domestic Product exr -Exchange rate a0 and a1 -Parameters e -Error term A’ PRIORI EXPECTATION It is expected that a0 > 0 and a1 < O Exchange rate is the price of a currency in terms of another currency while gross domestic product is the value of the goods and services produced in a country within a specific period of time.Exchange rate is expected to affect the gross domestic product negatively. A high exchange rate would not allow for the importation of capital goods that are need for productive activity, thereby impair economic growth. This is based on neoclassical trade models. MODEL II bot = b0 + b1 exr + e Where bot-Balance of trade exr -Exchange rate b0 and b1 -Parameters e -E rror term A’ PRIORI EXPECTATION It is expected that b0 > 0 and b1 > O Balance of trade is the net difference between total export and import.The relationship between exchange rate and balance of trade is expected to be positive negative. This is because a high exchange rate would encourage exportation and discourage importation and thereby making the balance of trade favourable i. e positive (when export is higher than import). MODEL III exrev = c0 + c1 exr + e Where exrev-External reserve exr -Exchange rate c0 and c1-Parameters e -Error term A’ PRIORI EXPECTATION It is expected that c0 > 0 and c1 < O External reserve is the amount of money which a country holds in foreign currency.It represents the savings of a nation. It is often accumulated from the proceeds from external trade. A high exchange rate would mean that a country would have to pay more to pay for the goods and services from other countries and as a result would not have much as external reserve. So the r elationship between exchange rate and external reserve is expected to be negative. MODEL IV cpi = d0 + d1 exr + e Where cpi -Consumer price Index exr -Exchange rate d0 and d1-Parameters e -Error term A’ PRIORI EXPECTATION It is expected that d0 > 0 and d1 > OConsumer price index is a measure of the general price level in an economy and as such an indicator of the standard of living of the people. A high exchange rate would impair production causing the general price level to rise. Therefore, the relationship between exchange rate and consumer price level is expected to be direct i. e positive. MODEL V gdp = e0 + e1 exr + e2 bot + e3 exrev + e4 cpi + e Where exr -Exchange rate bot-Balance of trade exrev-External reserve cpi -Consumer price Index e0, e1, e2, e3 and e4 -Parameters e -Error termA’ PRIORI EXPECTATION It is expected that e0 > 0, e1 < 0 e2> 0 e3 > 0, e4 > 0 According to the neoclassical trade model, exchange rate is expected to affect the gross domestic produ ct negatively. A high exchange rate would not allow for the importation of capital goods that are need for productive activity, thereby impair economic growth. Balance of trade represents the net trade. A favourable balance of trade (i. e net export) would increase the gross domestic product. So balance of trade would vary directly with the gross domestic product.The external reserve is also expected to have positive relationship with the external reserve. High external reserve would stabilize the foreign exchange market which therefore creates conducive environment for improved production and trade. Consumer price index is an indicator of the standard of living of the people. A high standard of living is expected to increase labour productivity and thereby stimulating growth. So consumer price index would vary directly with the gross domestic product. A high exchange rate would impair production causing the general price level to rise.Therefore, the relationship between exchange ra te and consumer price level is expected to be direct i. e positive. 1. 8SIGNIFICANCE OF THE STUDY The significance of this study are as follows: i) It would provide an empirical effect of exchange rate on the economic growth; ii) It would contribute to existing literature by identifying the major factors that are responsible for the spread between the official and parallel foreign exchange market rates in Nigeria; iii) Lastly, it would provide policy recommendations to policy-makers on ways to resuscitate the foreign exchange market in Nigeria. . 9SCOPE AND LIMITATION OF THE STUDY This study would focus extensively on the foreign exchange policies of Nigerian government and how they impacted on the structure of the foreign exchange market. The spread between the parallel and official foreign exchange market shall also be examined with the view of identifying the factors responsible for the differences. In the bid to identify the strategies for resuscitating the foreign exchange mark et in Nigeria, the importance of the official exchange rate in the economic growth process of Nigeria shall be empirically investigated.The influence of the external reserve shall also be given due consideration. Besides, major issues in the foreign exchange policy and current development in the Nigerian foreign exchange market shall be examined. These would enhance the suggestion of the ways to resuscitate the foreign exchange market in Nigeria. 1. 10ORGANISATION OF OTHER CHAPTER: 2-5 The rest of this study shall contain four chapters. Chapter two would present the literature review on the subject matter.The methodology to be adopted in the study would be stated in chapter three. Chapter four shall focus on the presentation and interpretation of the regression results. The last chapter – chapter five, would present the summary of the findings, conclusion and appropriate recommendations. REFERENCES Alaba, O. B. (2003). â€Å"Exchange rate uncertainty and foreign direct inves tment in Nigeria†. Being a paper presented at the WIDER Conference on Sharing Global Prosperity, Helsinki, Finland, 6-7 September. Kandil, M. and Mirzaie, I. A. 2003). â€Å"The Effect of Exchange rate Fluctuations of Output and Prices: Evidence from Developing Countries. † IMF Working Paper, WP/03/200, October. MacDonald, R. (1997). â€Å"What determines Real Exchange Rates? The Long and Short of it†. IMF Research Paper, WP/97/21, January. CHAPTER TWO LITERATURE REVIEW 1. INTRODUTION Exchange rate fluctuations and their effects on macro economic variables have generated an economics debate on the desirability of exchange rate policy. In judging the desirability of exchange rate fluctuations, it ecomes, necessary to evaluate their effects on output, price level and other macro economic parameter. Demand and supply channels determine the effects. The justification for this study was amply exemplified by the observation of the Secretary to the Government of the Fed eration of Nigeria, Ekaette, (2002). According to him, continuous depreciation of the Naira has encouraged currency speculation which unscrupulous individuals would naturally prefer to productive activity, leading to the diversion of invest able funds to non-productive activities.In the same vein, the former Governor of the Central Bank of Nigeria (CBN) Sanusi, (2002) stated that the choice of exchange rate regime is a critical issue. Suffice it to say that the current high interest rate structure represents the opportunity cost which the economy is paying for a misaligned exchange rate regime, indicative of the structural imbalance in the economy. The ultimate aim of this chapter is to present diversified views on the foreign exchange market and its mechanism and to also explain the exchange regimes of Nigeria as well as their effects on macroeconomic variables. 2.VARIOUS VIEWS ON EXCHANGE RATE FLUCTUATIONS IN THE FOREIGN EXHANGE MARKET According to Kandil and Mirzaie (2003), unant icipated exchange rate may be the result of a change in agents’ rational forecast, under a fixed exchange rate regime, or the result of an unexpected movement in the exchange rate, under a flexible rate regime. They noted that in line with theory’s prediction, the effects of unanticipated exchange rate fluctuations on output and prices may be positive or negative across countries, according to the relative effects of currency fluctuations on the supply and demand of the respective countries.On the hand, Kandil and Mirzaie (2003) opined that movements in the exchange rate that are consistent with agents’ expectations have limited effects on the macro economy. They however, noted that in many developing countries, high variability of exchange rate fluctuations around its anticipated value may generate adverse effects in the form of higher price inflation and larger output contraction. Rutasitara, L. (2004) observed that the parallel market exerted greater influenc e on the exchange rate during periods of shortage and controls; it disappeared as further liberalization took hold.He argued that while a more or less â€Å"stable† nominal exchange rate is desirable for trade and investment decisions, it is more important to maintain the rate at sustainable levels. He noted that the level and prospects of the foreign reserves position are important in this respect. He advised that output and export strategies to ensure a well supplied foreign exchange market need to be furthered. The supply of foreign currency would also include foreign grants and/or loans. Cheong, (2004) noted that the higher moments in the exchange rate is non-constantly varied with clustering.He investigated a possible effect of risk in exchange rates on import trade in the UK. The empirical results show that uncertainty in exchange rates negatively affects international trade and, more importantly, the effect is statistically significant. Buffie, etal. (2004) focused on the management of highly persistent shocks to aid flows in three â€Å"post-stabilization† African economies with de jure flexible exchange rates. Such shocks were found to have beneficent long-run effects. He however noted that when currency substitution is high they can produce dramatic macroeconomic management problems in the short run.Alaba, (2003) argued that the parallel market exchange rate is the more important driver of activities in the Nigerian economy. He therefore noted that proper management of exchange rate, to forestall costly distortions, constitutes an important pillar in determining flow of FDI to Nigeria and indeed Sub-Sahara African countries. He opined that it is important that monetary authorities ensure transparency in determining exchange rate process such that various economic distortions associated with exchange rate may be minimized. 3. EFFECTS OF FOREIGN EXCHANGE MARKET INSTABILITYKandil, (2004) investigated the effect of exchange rate fluctuation s on economic performance in developing countries. The investigation presented a theoretical model that decomposed movements in the exchange rate into anticipated and unanticipated components. Anticipated exchange rate depreciation determines the cost of imported intermediate goods and, hence, the output supplied. In contrast, unanticipated currency fluctuations determine aggregate demand through exports, imports, and the demand for currency, and determine aggregate supply through the cost of imported intermediate goods.The first channel increases aggregate demand; currency depreciation increases exports and decreases imports. The second channel decreases aggregate demand. On the supply side, Kandil, (2004) explains that currency depreciation increases the cost to buy intermediate goods and decreases the output supplied. The combined effects of the three channels are indeterminate on output and price. The paper investigates the effects of exchange rate fluctuations (both anticipated and unanticipated) using output and price data for a sample of twenty-two developing countries.Kandil, (2004) concluded that for a varying degree of openness, exchange rate fluctuations generate adverse effects on economic performance in a variety of developing countries. These effects are evident by output contraction and price inflation in the face of currency depreciation. Indeed, concerns about the adverse effects of exchange rate depreciation on economic performance are supported by the evidence of macroeconomic performance for a sample of twenty-two developing countries.For policy implications, Kandil, (2004) suggests that exchange rate policies should aim at minimizing unanticipated currency fluctuations to insulate economic performance from the adverse effects of this variability in developing countries. Osakwe, (2002) examined the choice of exchange rate regime using a speculative attack model that took into account the real effects of unanticipated changes in real exchang e rates. It also incorporated two features that played prominent roles in recent currency crises in emerging markets: currency substitution and volatile capital flows.The two approaches were applied to incorporate the real effects of unanticipated changes in exchange rates into standard models of exchange rate regimes. In the first approach, the effects were introduced directly by assuming that the monetary authority’s loss function depended exclusively on the variance of real output but that aggregate demand or output depended, among other factors, on the deviation of actual from expected changes in the real exchange rate.In the second approach, the real effects of unanticipated exchange rate changes were incorporated indirectly by assuming that the monetary authority’s loss function depended on the variance of real output as well as the variance of the real exchange rate. It was concluded that the traditional models of exchange rate regimes ignore the destabilizing e ffects of sharp and unanticipated exchange rate movements. Odusola and Akinlo, (2001) focused on the link among the naira depreciation, inflation, and output in Nigeria.Evidence from their study revealed the existence of mixed results on the impacts of the exchange rate depreciation on the output. They observed that the impulse response functions exerted an expansionary impact of the exchange rate depreciation on the output in both medium and long terms. The opposite (contractionary impact) was however observed for the short-term horizon. These results tend to suggest that the adoption of a flexible exchange rate system does not necessary lead to output expansion, particularly in the short term.They noted that issues such as discipline, confidence, and credibility on the part of the government are essential. However, these issues are apparently lacking in Nigeria, as partly reflected in several policy reversals. Dekle (2002) developed a model of an exporting firm that experiences fl uctuating exchange rates and shocks to its cash flow. The firm uses its cash flow and borrows from the financial markets to produce for export later in the period. They noted that exchange rate and shocks to cash flows are correlated, but the correlation could be positive or negative.If, for example, they are negatively correlated, then the firm will suffer from low cash flows when its exchange rate is depreciated. That is, the firm’s production will be constrained exactly at the time when its export opportunities are greatest. This provides the rationale for the firm to hedge against shocks to its cash flow. Dekle (2002) related nominal exchange rates to export volumes at the firm level and finds that export volumes are strongly affected by changes in exchange rates. As in earlier work, they too found that prices are sticky in the buyer’s currency.In their model of exports, the strong response of export volumes to exchange rate fluctuations arises not because of chang es in the buyer’s currency prices, but because of a loosening of financing constraints, either through the direct beneficial effect of exchange rate shocks on cash flows, or through hedging activities. Uncertainty in exchange rates which immediately followed the collapse of the Bretton Woods system may be decomposed into two components. The first reflects systematic movement of the exchange rate and the second, exchange volatility (Darby et al. , 1999).Exchange rate volatility is usually taken as some measure of the dispersion of the rate over some period of time. Volatility of the rate impacts on growth through a variety of channels, including investment and trade. Interest in exchange rate uncertainty on investment stems from the standard result in option pricing theory, which suggests that the value of an option increases with an increase in the underlying volatility of the stock (Accam, 1997). Kosteletou and Liargovas (2000) studied the direction of effects of exchange ra te variability on the pattern and flow of investment.The study suggests that in theory, there is no clear cut distinction concerning the direction of such a relationship. It identifies at least six competing models in the literature, categorised under the trade integrated models and models of financial behaviour. The first category according to Kosteletou and Liargovas (2000) distinguishes between the traded and non-traded goods model. The second category distinguishes between the monetary approach to balance of payments, the strategic behaviour of international firms, the imperfect-capital-market theory and relative labour cost theory.The first hypothesis (model) suggests that for a developing country which is a price taker, an exogenous inflow of capital will lead to exchange rate appreciation or depreciation, depending on whether foreign exchange is used to finance domestic spending or capital accumulation in the traded and non-traded sector. The second model is the model of fina ncial behaviour. According to the (portfolio) model, financial and capital liberalisation in countries result in increase in total inflows and outflows.The proliferation of exchange rate systems, especially in developing countries which restricted the forces for long, suggest that further attention should be given to the degree to which these regimes influence the behaviour of economic fundamentals, including the flow of investment. The question of what exchange management strategy a country wishing to encourage foreign flows of investment should adopt is still unclearly resolved in the literature. Accam (1997) reviews the effect of exchange rate instability on macroeconomic performance with specific reference to the effects on investment and trade.In the survey, Fiani and de Melo (1990) found that unstable macroeconomic environment constitutes one of the major impediments to investment in many Less Developed Countries (LDCs). The authors estimate an OLS regression of the fixed coun try effects of total and private investment in 20 countries using the standard deviation of the exchange rate as a proxy for instability. The study finds a negative sign associated with the coefficient of exchange rate uncertainty. Serven and Solimano (1992), also investigates economic adjustment and nvestment performance for 15 developing countries using the pooled cross-section time series data from 1975 to 1988. The investment equation estimated in the study used exchange rate and inflation as proxies for instability, and in each case, instability was measured by the coefficient of the variation of the relevant variables over three years. The two measures were found to be jointly significant in producing negative effect on investment. The same effect was confirmed by Hadjimicheal et al’s (1995) study on growth, savings and investment performance of 41 developing countries between 1986 and 1993.Goldberg (1993) considers the effects of exchange rate uncertainty on investment using conditional measure of volatility. The paper suggests that the sign of the effect of price variability on investment and industry profitability is unresolved in the theoretical literature primarily because the sign of the relationship depends on the balance of (i) negative effects of risk aversion of investors (ii) negative effects from investment irreversibility (iii) positive effects from profit convexity in prices (iv) negative effects from a profit and price uncertainty relationship that is possible under imperfect competition.The author concludes that the direction of effect of exchange rate uncertainty on investment activity remains an empirical question. Agenor (1991) using a sample of twenty-three developing countries, regressed output growth on contemporaneous and lagged levels of the real exchange rate and on deviations of actual changes from expected ones in the real exchange rate, government spending, the money supply, and foreign income. The results showed that s urprises in real exchange rate depreciation actually boosted output growth, but that depreciations of the level of the real exchange rate exerted a contractionary effect.Morley (1992) analyzed the effect of real exchange rates on output for twenty-eight devaluation experiences in developing countries using a regression framework. After the introduction of controls for factors that could simultaneously induce devaluation and reduce output including terms of trade, import growth, the money supply, and the fiscal balance, he observed that depreciation of the level of the real exchange rate reduced the output.Rodriguez and Diaz (1995) estimated a six-variable VAR – output growth, real wage growth, exchange rate depreciation, inflation, monetary growth, and the Solow residuals – in an attempt to decompose the movements of Peruvian output. They observed that output growth could mainly be explained by â€Å"own† shocks but was negatively affected by increases in exchan ge rate depreciation as well. Rogers and Wang (1995) obtained similar results for Mexico. In a five-variable VAR model – output, government spending, inflation, the real exchange rate, and money growth – most variations in the Mexican output resulted from â€Å"own† shocks.They however noted that exchange rate depreciations led to a decline in output. 2. 4EXCHANGE RATE REGIMES IN NIGERIA Ekaette, (2002) noted that one major challenge that had confronted this administration since it assumed office in May 1999 was how to quickly put the economy back on the path of sustainable growth. According to him, most of the banks are suspected to have abandoned real banking for â€Å"round tripping† (the diversion of official Foreign Exchange to the Parallel Market).Soleye, (1985) then Honourable Minister of Finance stated that conscious effort aimed at the management of the Nigerian foreign exchange resources began in 1962 with the inception of the Exchange Control A ct, which was directed at freeing the management of the Foreign Exchange from its erstwhile colonial pattern. Oyejide, (1985) stated that the Nigerian Pound was introduced in 1959. Its external value was fixed at par with the British Pound Sterling which, in turn, defined its United States Dollar(USD) value as $2 . 80.Nigeria joined the International Monetary Fund (IMF) after Independence, and the Nigerian Pound had its parity defined, in June 1962, in terms of Gold at one Nigerian Pound equals 2. 48828 grams of fine gold. This confirmed its original USD par value. Similarly, the exchange rate of the Nigerian Pound for the British Pound Sterling was determined via its gold parity. However, the sterling was devalued by 14. 3 per cent against its gold parity in November, 1967. Since Nigeria did not devalue in tandem, the value of the Nigerian Pound became 1. 17 British Pounds Sterling.The Naira replaced the Nigerian Pound as Nigeria’s currency in January 1973, its par value was set at half that of the pound. Hence the exchange rate became $1. 52 to the naira. The rigid relationship between the USD and the naira was terminated in April 1974; the fixed rate for sterling had been broken earlier in June 1972, when the sterling started to float officially. In February 1978, the system of determining the naira exchange rate against a basket of currencies of Nigeria’s main trading partners was finally adopted. According to Ugbebor (1998), the Oil glut of 1981 led to a crisis in the Foreign Exchange Market (FEM) in 1982.In December 1983 there was a change in government. With effect from January 1984 and again in May 1984 additional exchange control measures were introduced. Another change in government took place in August 1985. In September 1986, the Second-Tier Foreign Exchange Market (SFEM) was introduced. Under SFEM, the exchange rate was floated when it became obvious that a rigid or controlled exchange rate would not ensure internal balance. The prin ciples of the Structural Adjustment Programme (SAP) were adopted leading to a market – oriented approach to price determination.The Second –Tier rate was determined by auction at the SFEM using (a) the average rate pricing method, (b) the marginal rate pricing method, (c) the Dutch Auction System (DAS) which was introduced in April 1987, whereby the CBN bought and sold Foreign Exchange in this market and supplied the demand of the authorized dealers in full. The First-Tier rate was still applicable to Debt Service payments, other public sector disbursements and pre-SFEM transactions. The merger of the two markets in July 1987 to form an enlarged FEM was more technical than real.According to Akinmoladun (1990), the gap between the two rates began to grow shortly after. In January 1989, the DAS was re-introduced and the Dual Exchange Rate system FEM merged with the Inter-bank market to form IFEM. By March 1992 there was a complete floating of the naira. Another change in government in August, 1993 ushered in a new fixed exchange rate. In 1995, the Autonomous Foreign Exchange Market (AFEM) was introduced, under a policy which allowed for Central Bank of Nigeria intervention on a predetermined basis instead of arbitrarily.Under AFEM, Bureaux De Change would buy and sell from privately-sourced Foreign exchange at the AFEM rate. The fixed exchange rate was reserved for public sector use. In 1993, the Parallel Market and Bureaux de Change exchange rates were almost double the devalued First-Tier rate for the naira. The authorities saw this as a signal of a depreciation trend which needed correction. This led to a re-introduction of a fixed exchange rate which pegged the naira at N21. 996 to $1 in 1994. In January 1997, the naira was formally pegged and a pro rata system of FE allocation to end- users was adopted.The Foreign Exchange Market was further liberalized in October, 1999 with the introduction of an Inter-bank Foreign Exchange Market (IFEM). 2. 5STRUCTURE OF FOREIGN EXCHANGE MARKET IN NIGERIA The exchange control system was unable to evolve an appropriate mechanism for foreign exchange allocation in consonance with the goal of internal balance. This led to the introduction of the Second-tier Foreign Exchange Market (SFEM) in September, 1986. Under SFEM, the determination of the Naira exchange rate and allocation of foreign exchange were based on market forces.To enlarge the scope of the Foreign Exchange Market Bureaux de Change were introduced in 1989 for dealing in privately sourced foreign exchange. As a result of volatility in rates, further reforms were introduced in the Foreign Exchange Market in 1994. These included the formal pegging of the naira exchange rate, the centralisation of foreign exchange in the CBN, the restriction of Bureaux de Change to buy foreign exchange as agents of the CBN, the reaffirmation of the illegality of the parallel market and the discontinuation of open accounts and bills for collection as means of payments sectors.The Foreign Exchange Market was liberalised in 1995 with the introduction of an Autonomous Foreign Exchange Market (AFEM) for the sale of foreign exchange to end-users by the CBN through selected authorised dealers at market determined exchange rate. In addition, Bureaux de Change were once more accorded the status of authorized buyers and sellers of foreign exchange. With the failure of the Autonomous Foreign Exchange Market (AFEM), the Foreign Exchange Market was further liberalized in October, 1999 with the introduction of an Inter-bank Foreign Exchange Market (IFEM).The IFEM was designed as a two-way quote system, and intended to diversify the supply of foreign exchange in the economy by encouraging the funding of the inter-bank operations from privately-earned foreign exchange. The IFEM also aimed at assisting the naira to achieve a realistic exchange rate. The operation of the IFEM, however, experienced similar problems and setbacks as the AFEM, ow ing to supply-side rigidities, the persistent expansionary fiscal operations of government and the attendant problem of persistent excess liquidity in the system. The peculiarity of the Nigerian foreign exchange market needs to be highlighted.The country’s foreign exchange earnings are more than 90 per cent dependent on crude oil export receipts. The result is that the volatility of the world oil market prices has a direct impact on the supply of foreign exchange. Moreover, the oil sector contributes more than 80 per cent of government revenue. Thus, when the world oil price is high, the revenue shared by the three tiers of government rise correspondingly and, as has been observed since the early 1970s, elicited comparable expenditure increases, which had been difficult to bring down when oil prices collapse and revenues fall concomitantly.Indeed, such unsustainable expenditure level had been at the root of high government deficit spending. It is therefore important that rese rves be built up when the price is high to cushion the effect of revenue shortfall on government spending when oil price falls in the international oil market. Specifically, the sustained demand pressure and the consequent depreciation of the naira exchange rate under the IFEM were traced to the following causes. ? Limited sources of foreign exchange supply.In particular, the anticipated supplies from autonomous sources, such as oil companies, banks and non-bank financial institutions were significantly below what was required to broaden and deepen the market; ? The excess liquidity in the system induced by the transfer of government accounts from the CBN to banks and the huge extra-budgetary spending in 1999 on unproductive ventures; ? The heavy debt service burden; and ? Speculative demand, driven by uncertainties created by social and political unrest, expectations of future depreciation of the naira, as well as the deterioration of the external sector position.It became a matter of serious concern that despite the huge amount of foreign exchange, which the CBN supplied to the foreign exchange market, the impact was not reflected in the performance of the real sector of the economy. Arising from Nigeria’s high import propensity of finished consumer goods, the foreign exchange earnings from oil continued to generate output and employment growth in other countries from which Nigeria’s imports originated. This development necessitated a change in policy on 22nd July 2002, when the demand pressure in the foreign exchange market intensified and the depletion in external reserves level persisted.The CBN thus, re-introduced the Dutch Auction System (DAS) to replace the IFEM. The DAS was designed to achieve a realistic exchange rate of the naira that will stem the excessive demand for foreign exchange, conserve the dwindling external reserves and achieve a realistic exchange rate for the naira. The DAS was conceived as a two-way auction system in whic h both the CBN and authorised dealers would participate in the foreign exchange market to buy and sell foreign exchange. The CBN was expected to determine the amount of foreign exchange it is willing to sell at the price buyers are willing to buy.The marginal rate, which by definition is the rate that clears the market, represents the â€Å"ruling† rate at the auction. Since its introduction in July 2002, the DAS has been largely successful in achieving the objectives of the monetary authorities. Generally, it has assisted in narrowing the arbitrage premium from double digit to a single digit, until the emergence of irrational market exuberance in the fourth quarter of 2003. Secondly, the DAS has enhanced the relative stability of the naira, vis-a-vis the US dollar-the intervention currency.Specifically, the naira has fluctuated within a single digit band, since the DAS was introduced in July 2002. Thirdly, it has also assisted in stemming the spate of capital flight and curb ing rent-seeking amongst market operators. REFERENCES Accam B. (1997). â€Å"Survey of Measurement of Exchange Rate Instability†, Mimeo. Agenor, Pierre-Richard (1991). â€Å"Output, Devaluation and the Real Exchange Rate in Developing Countries. † Weltwintschaftliches Archiv vol. 127, no. 1, pp. 18–41. Akinmoladun, O. (1990). â€Å"An Appraisal of Foreign Exchange Management in Nigeria since the introduction of the Structural Adjustment Programme†.Proceedings of the 1990 One –Day seminar Published by the Nigerian Economic Society PP 29 – 69. Alaba, O. B. (2003). â€Å"Exchange rate uncertainty and foreign direct investment in Nigeria†. Being a paper presented at the WIDER Conference on Sharing Global Prosperity, Helsinki, Finland, September. Betts, C. M. and Kehoe, T. J. (2001). â€Å"Tradability of Goods and Real Exchange Rate Fluctuations. † Paper presented at a seminar, January. Buffie, E. , Adam, C. , Connell, S. and Pattil lo, C. (2004). â€Å"Exchange Rate Policy and the Management of Official and Private Capital Flows in Africa†.IMF Working Paper WP/04/216, November. Cheong, C. (2004). â€Å"Does the risk of exchange rate fluctuation really affect international trade flows between countries?. † Economics Bulletin, Vol. 6, No. 4, pp. 1? 8. Available at http://www. economicsbulletin. com/2004/volume6/EB? 04F10002A. pdf Darby J. , Hallet, A. H. , Ireland, J. and Piscitelli, L. (1999). â€Å"Exchange Rate Uncertainty and Business Sector Investment†, Paper Prepared for a Workshop on â€Å"Uncertainty and Factor Demand† Hamburg, August. Dekle, R. , (2001). â€Å"Exchange Rates and Corporate Exposure: Evidence from Japanese Firm Level Data†, mimeo.Ekaette, U. J (2002). â€Å"Monetary Policy and Exchange Rate Stability†, Proceedings of a One day Seminar held on 23 May 2002, Federal Palace Hotel, Lagos. Publisher: The Nigerian Economic Society. Pp (ix) – (xi). Goldberg L. S. (1993). â€Å"Exchange Rates and Investment in United States Industry†. Review of Economics and Statistics vol. LXXV: pp. 575-88. Kandil, M. (2004). â€Å"Exchange rate fluctuations and economic activity in Developing countries: theory and evidence†. Journal of Economic Development, vol. 29, No. 1, June. Kandil, M. and Mirzaie, I. (2003). The effects of Exchange rate fluctuations on Output and Prices: Evidence from developing countries. † IMF Working Paper WP/03/200, October. Kosteletou N. and Liargovas, P. (2000), â€Å"Foreign Direct Investment and Real Exchange Inter-linkages†, Open Economies Review vol. 11: pp. 135-48. Morley, S. A. (1992). â€Å"On the Effect of Devaluation During Stabilization Programs in LDCs. † Review of Economics and Statistics vol. 74, No. 1, pp. 21–27. Odusola, A. F. and Akinlo, A. E. (2001). â€Å"Output, Inflation and Exchange rate in Developing Countries†. The Developing Economies, vol. 34 (2), June. Osakwe, P. N. 2002). â€Å"Currency Fluctuations, Liability Dollarization, and the Choice of Exchange Rate Regimes in Emerging Markets†. Bank of Canada Working Paper 2002-6, February. Oyejide, T A. (1985). â€Å"Exchange Rate Policy for Nigeria: Some options and their consequences†. Proceedings of the 1985 One-Day Workshop Published by the Nigeria Economic Society pp 17 – 32. Rowland, P. (2003). â€Å"Forecasting the USD/COP Exchange Rate: A Random Walk with a Variable Drift’ (A paper downloaded from the internet). Rutasitara, L. (2004). â€Å"Exchange rate regimes and inflation in Tanzania. † AERC Research Paper 138, February.Soleye, O. O. (1985). Proceedings of the 1985 One-Day Workshop Published by the Nigeria Economic Society pp. 15 – 16. Ugbebor, C. O. (1998). â€Å"Development of the Nigerian Foreign Exchange Market (An overview)†, an original essay submitted to the Department of Economics, Unversity of Ibadan. CHAPT ER THREE RESEARCH METHODOLOGY 3. 1INTRODUCTION This chapter explains the various techniques used in collecting data for this study. It also provides the background against which the study is being carried out and it also states the extent to which the findings can be generalised. . 2RESEARCH DESIGN This research work intends to empirically examine the Nigerian foreign exchange market. It shall consider the influence of fluctuations in the exchange rate on major macroeconomic variables in Nigeria. The study shall focus mainly on the relationship that exists between exchange rate, economic growth, foreign trade, external reserve and the domestic prices of goods and services in Nigeria. Regression analysis method shall be employed to investigate the relationship between the specified variables with data spanning between 1980 and 2005. 3. RESEARCH QUESTIONS The study shall examine the following questions: 1. What are the determinants of foreign exchange rates? 2. What has been the impac t of foreign exchange rate on the growth of Nigerian economy? 3. How does the foreign exchange rate impacts on foreign trade of Nigeria? 4. What is the relationship between foreign exchange rate and external reserve? 5. How does the exchange rate affects the domestic prices of goods and services in Nigeria? 3. 4RESEEARH METHODOLGY 3. 4. 1 SOURCES OF DATA Secondary data shall be the basis for data analysis in this study.We shall rely much on the various publications of Central Bank of Nigeria (CBN): Statistical Bulletin, Annual Reports and Financial Reports, Federal Office of Statistics (FOS) annual reports (FOS), Conference papers, journals etc. The variables for which data would be sourced include: Exchange Rate, Gross Domestic Product, Balance of Trade, External Reserve and Consumer Price Index. 3. 4. 2 TECHNIQUE OF DATA ANALYSIS We shall employ econometric technique to estimate the parameters of the various economic relationship established in our models.The Econometric approach that would be adopted to examine impact of foreign exchange market operations on macro economic variables in Nigeria shall be the Vector Autoregressive Model (VARM) method. This econometric method would be used because it is very reliable and widely used in researches. The test of the hypotheses earlier stated would be done at 5% level of significance and as such, the generalization of the study findings would be limited to this extent. 3. 5MODEL RE-SPECIFICATION MODEL I gdp = a0 + a1 exr + e Where gdp-Gross Domestic Product exr -Exchange rate 0 and a1 -Parameters e -Error term MODEL II bot = b0 + b1 exr + e Where bot-Balance of trade exr -Exchange rate b0 and b1 -Parameters e -Error term MODEL III exrev = c0 + c1 exr + e Where exrev-External reserve exr -Exchange rate c0 and c1-Parameters e -Error term MODEL IV cpi = d0 + d1 exr + e Where cpi -Consumer price Index exr -Exchange rate d0 and d1-Parameters e -Error term MODEL V gdp = e0 + e1 exr + e2 bot + e3 exrev + e4 cpi + e Where exr -Exchange rate bot-Balance of trade xrev-External reserve cpi -Consumer price Index e0, e1, e2, e3 and e4 -Parameters e -Error term 3. 6A’ PRIORI EXPECTATION Economic A’ Priori Criteria: This refers to the sign and size of the parameters in economic relationships. MODEL I gdp = a0 + a1 exr + e It is expected that a0 > 0 and a1 < O Exchange rate is the price of a currency in terms of another currency while gross domestic product is the value of the goods and services produced in a country within a specific period of time. Exchange rate is expected to affect the gross domestic product negatively.A high exchange rate would not allow for the importation of capital goods that are need for productive activity, thereby impair economic growth. This is based on neoclassical trade models. MODEL II bot = b0 + b1 exr + e It is expected that b0 > 0 and b1 > O Balance of trade is the net difference between total export and import. The relationship between exchange rate and balan ce of trade is expected to be positive negative. This is because a high exchange rate would encourage exportation and discourage importation and thereby making the balance of trade favourable i. positive (when export is higher than import). MODEL III exrev = c0 + c1 exr + e It is expected that c0 > 0 and c1 < 0 External reserve is the amount of money which a country holds in foreign currency. It represents the savings of a nation. It is often accumulated from the proceeds from external trade. A high exchange rate would mean that a country would have to pay more to pay for the goods and services from other countries and as a result would not have much as external reserve. So the relationship between exchange rate and external reserve is expected to be negative.MODEL IV cpi = d0 + d1 exr + e It is expected that d0 > 0 and d1 > O Consumer price index is a measure of the general price level in an economy and as such an indicator of the standard of living of the people. A high exchange r ate would impair production causing the general price level to rise. Therefore, the relationship between exchange rate and consumer price level is expected to be direct i. e positive. MODEL V gdp = e0 + e1 exr + e2 bot + e3 exrev + e4 cpi + e Where exr -Exchange rate bot-Balance of trade exrev-External reserve cpi -Consumer price Index 0, e1, e2, e3 and e4 -Parameters e -Error term It is expected that e0 > 0, e1 < 0 e2> 0 e3 > 0, e4 > 0 According to the neoclassical trade model, exchange rate is expected to affect the gross domestic product negatively. A high exchange rate would not allow for the importation of capital goods that are need for productive activity, thereby impair economic growth. Balance of trade represents the net trade. A favourable balance of trade (i. e net export) would increase the gross domestic product. So balance of trade would vary directly with the gross domestic product.The external reserve is also expected to have positive relationship with the external r eserve. High external reserve would stabilize the foreign exchange market which therefore creates conducive environment for improved production and trade. Consumer price index is an indicator of the standard of living of the people. A high standard of living is expected to increase labour productivity and thereby stimulating growth. So consumer price index would vary directly with the gross domestic product. A high exchange rate would impair production causing the general price level to rise.Therefore, the relationship between exchange rate and consumer price level is expected to be direct i. e positive. STATISTICAL CRITERIA This aims at the evaluation of the statistical reliability of the estimates of the parameters. In this line, the â€Å"t-statistics† will be employed to test the hypotheses concerning the true values of the population parameters a1, a2 and a3. The â€Å"R2 – Statistics is also employed as the coefficient for determination to measure the goodness o f fit of the regression line to the observed samples values of the variable while the â€Å"F-statistics† will also be used to test the overall significance of the regression.ECONOMETRIC CRITERIA It aims at detecting the violation or validity of the assumption of the econometric method employed (i. e. OLS). To test the validity of the assumption of non-correlated disturbances, the â€Å"Durbin Watson Statistics† would be used in the evaluation of the results of estimates. REFERENCES Koutsoyiannis A. (1991), Theory of Econometrics, Hampshire: Macmillan Limited Ogede P. O. (1999), Undergraduate Econometrics, Lagos: Minerib, Accord Limited Robert S. Pindyck and Daniel L. Rubinfeld (1998), Econometric Models and Economic forecasts, Singapore: Irwin McGraw-Hill. CHAPTER FOUR PRESENTATION AND ANALYSIS OF DATA . 1INTRODUCTION The hypotheses were formulated with data spanning the period between 1980 and 2005. All the data for estimation were obtained from the publications of t he Central Bank of Nigeria (CBN) and Federal Office of Statistics (FOS). The choice of statistics adopted in this chapter is the regression and analysis of variance. The variance of the estimate is obtained by multiplying the standard error with the square reciprocal of the derivative i. e variance. The traditional test of significance of the parameter estimates is the standard error test, which is equivalent to the student’s t–test.The correlation coefficient (r) shows the relationship between the variables. The relationship could be of a direct, indirect or an outright zero correlation. The standard error is obtained by taking the inverse of the variance of the estimate. The standard errors for the estimate of a1, b1 etc. will be dealt with in this project. The standard error for the estimates a0 and b0 are left out. The F-Ratio is used to determine the overall significance of the regression models i. e. to determine the extent to which the variations in the dependen t variable can be attributed to changes in the explanatory variables.This test shall be used to measure the extent of the claimed relationship between the exchange rate, gross domestic product, balance of trade, external reserve and consumer price. F-ratio would also be used to test for causality between the variables. The coefficient of determination (R2) is used to determine the overall significance of the model just like the F-ratio. A high coefficient of determination signifies that the regression model is statistically significant, meaning that there is high relationship between the dependent variables and the interdependent variables. 4. 2PRESENTATION OF REGRESSION RESULTSMODEL I gdp = a0 + a1 exr gdp = 81582. 54 + 445. 356ex t – statistic (27. 07) (8. 573)a Std. Error (3013. 762) (51. 946)* F-Ratio -73. 503 R2-0. 762 R2-0. 751 D-W-0. 536 N-25 d. f-N – K = 25 – 2 = 23 * Figures in parentheses are the standard errors a – Significant at 5%. Source: Co mputed by Author from SPSS Regression Results MODEL II bot = b0 + b1 exr bot = -11771. 2 + 8652. 278 exr t – statistic (-0. 129) (5. 491)a Std. Error (91420923) (1575. 762)* F-Ratio -30. 49 R2-0. 567 R2-0. 548 D-W-1. 298 N-25 d. f-N – K = 25 – 2 = 23 * Figures in parentheses are the standard errors a – Significant at 5%. Source: Computed by Author from SPSS Regression Results MODEL III exrev = c0 + c1 exr exrev = -66440. 5 + 11080. 057exr t – statistic (-1. 190) (11. 509)a Std. Error (55854. 58) (962. 729)* F-Ratio -132. 457 R2-0. 852 R2-0. 846 D-W-1. 608 N-25 d. f-N – K = 25 – 2 = 23 * Figures in parentheses are the standard errors a – Significant at 5%. Source: Computed by Author from SPSS Regression Results MODEL IV pi = d0 + d1 exr cpi = 313. 623 + 40. 736 exr t – statistic (1. 69) (12. 737)a Std. Error (185. 548) (3. 198)* F-Ratio -162. 242 R2-0. 876 R2-0. 870 D-W-0. 727 N-25 d. f-N – K = 25 – 2 = 23 * Figures in parentheses are the standard errors a – Significant at 5%. Source: Computed by Author from SPSS Regression Results MODEL V gdp = e0 + e1 exr + e2 bot + e3 exrev + e4 cpi gdp = 77374. 9 + 140. 6exr + 0. 007bot – 0. 061exrev + 10. 28cpi t – statistic(-0. 243) (-1. 364)a (1. 258)a (-0. 013)a (3. 19)a Std. Error (33. 074) (0. 23)* (0. 76)* (0. 000)* (0. 000)* F-Ratio -35. 732 R2-0. 877 R2-0. 853 D-W-1. 082 N-25 d. f-N – K = 25 – 5 = 20 * Figures in parentheses are the standard errors a – Significant at 5%. Source: Computed by Author from SPSS Regression Results 4. 3INTERPRETATION AND ANALYSIS OF RESULTS MODEL I Going by the results of the regression, there is a positive relationship between exchange rate and the gross domestic product (GDP). But this result is not in consonance with the a priori expectation earlier stated. Since the standard error of the parameter estimate S. . (a1): 51. 946 is less than half of the parameter estimat e (a1/2): 222. 678, we shall therefore reject the null hypothesis and accept the alternative hypothesis. This indicates that the parameter estimate is statistically significant. The theoretical t-value at 5% level of significance with twenty-three degree of freedom is 1. 714. The theoretical t-value is less than the calculated t-value (8. 573); we shall therefore reject the null hypothesis and accept the alternative hypothesis. This implies that the parameter estimate (exchange rate) is statistically different from zero i. e. t is a relevant variable for the determination of the gross domestic product in Nigeria. The coefficient of determination gives 0. 762 or 76. 2% meaning that the regression model is 76. 2% significant i. e the variations in the dependent variable i. e. the gross domestic product is 76. 2% attributable to the changes in the independent variable i. e exchange rate. This result confirms the significance of the exchange rate in the determination of the gross domest ic product of Nigeria. The calculated F-value (73. 503) is less than the critical F-value at 5% level of significance with v1 = 1 and v2 = 23 (4. 8). We shall therefore reject the null hypothesis and accept the alternative hypothesis. This signifies that the overall regression or relationship between the gross domestic product and exchange rate is significant. This analysis revealed to us that exchange rate is a major determinant of the level of productivity in Nigeria. Besides, exchange rate was found to vary directly with the gross domestic product. MODEL II From the results of the second regression, it is evident that there is also positive relationship between the exchange rate and balance of trade.This relationship conforms with the a’ priori expectation. The standard error of the parameter estimate S. e. (b1): 1575. 762 is less than the half of the parameter estimate (b1/2):4326. 139. We shall therefore reject the null hypothesis and accept the alternative hypothesis. T his indicates that the parameter estimate is statistically significant. The theoretical t-value at 5% level of significance with twenty-three degree of freedom is 1. 714. On comparing with the computed t-value, the critical t-value is less than the calculated t-value (5. 491).We shall therefore reject the null hypothesis and accept the alternative hypothesis meaning that the parameter estimate i. e exchange rate is statistically different from zero i. e. it affects the dependent variable – balance of trade. In this model the coefficient of determination gives 0. 567 or about 57%. This shows that the regression model is 57% significant i. e the variation in the balance of trade is 57% attributable to the changes in the independent variable. The calculated F-value (30. 149) is less than the critical F-value at 5% level of significance with v1 = 1 and v2 = 23 (4. 28).We shall therefore reject the null hypothesis and accept the alternative hypothesis. This means that the overall regression or relationship between the exchange rate and the balance of trade is statistically significant i. e there is causality between the two variables. MODEL III The result of the third regression was not in consonance with what was expected. The results showed a positive relationship between the external reserve and the exchange rate. This could be attributed to import reduction strategy of the government over the years. For the standard error test, the standard error of the parameter estimate S. . (c1):962. 729 is less than the half of the parameter estimate (c1/2):5540. 02. We shall therefore reject the null hypothesis and accept the alternative hypothesis. This shows that the parameter estimate is statistically significant. The theoretical t-value at 5% level of significance with twenty-three degree of freedom is 1. 714. The theoretical t-value is less than the computed t-value; 11. 509; so that we reject the null hypothesis and accept the alternative hypothesis; implying that the parameter estimate (exchange rate) is statistically different from zero i. . it is a relevant variable for the determination of the external reserve of the country. The coefficient of determination shows 0. 852 or 85. 2% meaning that the regression model is about 85% significant i. e the variation in the dependent variable i. e. external reserve is 85% attributable to the changes in the independent variable i. e exchange rate. The computed F-value (132. 457) is greater than the critical F-value at 5% level of significance with v1 = 1 and v2 = 23 (4. 28). We shall therefore reject the null hypothesis and accept the alternative hypothesis.This signifies that the overall regression between the exchange rate and external reserve is also significant. MODEL IV Like the previous regression results, changes in the explanatory variable (exchange rate) in this model had positive effect on the consumer price index. This result is in consonance with the a priori expectation. The standa rd error of the parameter estimate S. e. (d1): 3. 198 s less than the half of the parameter estimate (d1/2):20. 368. We shall therefore reject the null hypothesis and accept the alternative hypothesis. This means that the parameter estimate – exchange rate is statistically significant.From the t-table, the theoretical t-value at 5% level of significance with twenty-three degree of freedom is 1. 714. In respect of the parameter estimate – exchange rate, the theoretical t-value is less than the calculated t-value (12. 737), we shall therefore reject the null hypothesis and accept the alternative hypothesis. This implies that the parameter estimate is statistically different from zero. The coefficient of determination (R2) gives 0. 876 or 87. 6% meaning that the regression model has a good fit i. e the variations in the dependent variable i. e. consumer price index is 85. % attributable to the changes in the independent variable i. e exchange rate. The theoretical F-value at 5% level of significance with v1 = 1 and v2 = 23 is 4. 28. Since the calculated F-value (162. 242) is greater than the critical value, we shall reject the null hypothesis and accept the alternative hypothesis. This signifies that the overall regression or relationship between the exchange rate and consumer price index is significant so, the changes in the consumer price index can to a certain extent, be attributed to changes in the explanatory variable – exchange rate. MODEL VThe results of the last regression that examined the relationship between the gross domestic, exchange rate, balance of trade, external reserve and consumer price index shows that there is positive relationship between the gross domestic product and the explanatory variables except the external reserve. Also, the standard errors of all the parameter estimates are less than the half of the parameter estimates. We shall therefore reject the null hypothesis and accept the alternative hypothesis. This sh ows that the parameter estimates – exchange rate, balance of trade, external reserve and consumer price index are all statistically significant.This means that they are important factors that affect the value of the gross domesti