2 edition of Money market disequilibrium and the balance of payments in Nigeria. found in the catalog.
Money market disequilibrium and the balance of payments in Nigeria.
Peter I. Ozo-Eson
|Series||Carleton economics papers -- 82-03|
Political instability in a country creates uncertainty among foreign investors which leads to the outflow of capital and retards its inflow. In a free market, it is expected that the price would increase to the equilibrium price as the scarcity of the good forces the price to go up. The fixed exchange rate system was adopted between andwhile the flexible system has remained in use from to date albeit series of modification. Cyclical Disequilibrium ii. There is a growing agreement in the literature that prolonged and substantial exchange rate misalignment can create severe macroeconomic disequilibria and the correction of external balance will require both exchange rate devaluation and demand management policies. The general view of researchers about exchange rate is that if the exchange rate of a country is properly valued, it does not substantially affect the balance of payments and thus macro economic performance of that country.
The resulting state of affairs has been referred to as Bretton Woods II. This method can help to reduce the fluctuation of exchange rate as the currency transfer is fairly stable and this could encourage foreign investor to invest within the domestic economy and they are confidence about the exchange rate. There were approximately 16 BoP crises and 15 twin crises and a comparatively very high level of banking crises. But the above analysis of a combined current and capital account deficit is not correct in practice.
In the early to mids, many free market economists and policy makers such as U. Inflation 7. Furthermore, structural changes are also produced by variations in the rate of international capital movements. If the national income of a country increases, it will lead to an increase in imports thereby creating a deficit in its balance of payments, other things remaining the same.
century of archaeological discoveries.
Value added tax and land and buildings
Child labor; facts and figures.
San Francisco County Street Guide & Directory, 1995 (Thomas Guide San Francisco & Marin Counties Street Guide)
Statement of the origin and progress of the Societies of United Irishmen
Two early political associations
bicentenary of the death of Sir Christopher Wren
Apple BASIC for business for the apple II
You can increase your heart-power.
The Quick Series Guide to Baseball Hitting
Proceedings of the Second Graduate Colloquium on Slavic Linguistics
Exempt from reciprocal compensation requirements telecommunications traffic to the internet
Hormone replacement therapy
In short, true disequilibrium is a long-term phenomenon.
A deficit in the combined current and capital accounts is regarded as undesirable for the country. Fixed but flexible exchange rates were established, with the system anchored by the dollar which alone remained convertible into gold.
Updated Sep 9, What Is Disequilibrium? They lead to changes in costs, prices and quality of products. But the fall in exports may be more than that of imports due to decline in domestic production.
Price Changes: Inflation or deflation is another cause of disequilibrium in the balance of payments. Flight Of Capital Due to speculative reasons, countries may lose foreign exchange or gold stocks People in Money market disequilibrium and the balance of payments in Nigeria.
book countries may also shift their capital to developed countries to safeguard against political uncertainties. Trade Cycles 2. InNigeria reverted to a fixed parity with the British Pound following the devaluation of the US dollar. Usually, a rising trade surplus leads to a rising value of the currency.
This was mirrored Money market disequilibrium and the balance of payments in Nigeria. book the faster growth for the US current account deficit from the same year, with surpluses, deficits and the associated buildup of reserves by the surplus countries reaching record levels by the early s and growing year by year.
Opposite is the case of an undervalued currency. Depreciation occurs in a free market system wherein demand for foreign exchange far exceeds the supply of foreign exchange in foreign exchange market of a country Mind, devaluation is done in fixed exchange rate system.
On the other hand, a developing country borrowing large funds from other countries and international institutions may have a favourable BOP. At the same time, imports should be discouraged by undertaking import substitution and imposing reasonable tariffs. However, consumers may reduce the quantity of wheat that they purchase, given the higher price in the market.
Demonstration Effect When the people in the less developed countries imitate the consumption pattern of the people in the developed countries, their import will increase. It also allows its companies to develop goods and services by using its own people as a test market. The current account measures international trade, the net income on investments and direct payments.
In the immediate aftermath of the Bretton Woods collapse, countries generally tried to retain some control over their exchange rate by independently managing it, or by intervening in the foreign exchange market as part of a regional bloc, such as the Snake which formed in Their propensity to import goes on increasing for want of capital for rapid industrialisation; while exports may not be boosted up to that extent as these is the primary producing countries.
Share this:. At this price, consumers are willing to purchase more wheat Q2 at the lower price. Power was associated with wealth, and with low levels of growth, nations were best able to accumulate funds either by running trade surpluses or by forcefully confiscating the wealth of others.
When prices rise during prosperity and fall during a depression, a country which has a highly elastic demand for imports experiences a decline in the value of imports and if it continues its exports further, it will show a surplus in the balance of payments.
A country's balance of payments tells you whether it saves enough to pay for its imports. Exchange rate policy in Nigeria has undergone a good number of changes but as observed by Sani 3it has gone through many changes but spanning between two major regimes, namely, the fixed and flexible exchange rate regimes.
Given the excess commodity supplied, suppliers will want to quickly sell the wheat before it gets rancid, and will proceed to reduce the sales price.
Cyclical Disequilibrium ii. The poor marketing facilities of the developing countries have pushed them into huge deficits. As a result, the country imports more and exports less of goods.Balance of Payments stability in Money market disequilibrium and the balance of payments in Nigeria.
book from to using an Ordinary Least Squares (OLS) technique of multiple regressions. The estimated result shows a positive relationship between the BOP and the monetary variables of Money Supply, Exchange Rate and Interest tjarrodbonta.com: Lawrence Ehikioya.
In fact, when we talk of disequilibrium, it refers to current account of balance of payment. If autonomous receipts are less than autonomous payments, the balance of payment is in deficit reflecting disequilibrium in balance of payment.
Chapter 12 Review Questions 1. The IS-LM-BP model defines six regions, each corresponding to disequilibrium in the money market, goods market and/or the balance of payments.
Identify and describe each of these when capital is perfectly mobile, and when capital is perfectly immobile. Under conditions of perfect capital mobility Zone BP: Balance of.In addition, with the export of oil, pdf the largest component of trade or merchandise balance, and consequently, the overall BOP's balance of Nigeria, changes in the inflow from export, due to fluctuations in the price of crude oil have the ability to disrupt the balance of the BOP.Disequilibrium is also used to describe a deficit or surplus in a country’s balance of payments.
Key Takeaways Disequilibrium is when external forces cause a disruption in a market's supply and.Any disequilibrium ebook the balance of payments arises owing to a large number of causes or factors operating simultaneously. Types of disequilibrium differ from country to country, while the different kinds of disequilibrium and their causes in the same country will differ at different times.