Exchange Rate Volatility, Inflation and Savings Behaviour: A Comparative Analysis of Political Era in Nigeria
The effect of exchange rate volatility and inflation on savings behaviour across political era in Nigeria was examined by comparing the civilian with the military era. This investigation is imperative to determine which regime performed better in terms of savings mobilisation and the economic condition that engender such performance. The study makes use of time series data from the Central Bank of Nigeria Statistical Bulletin covering the period of 1984 to 2015 and the Autoregressive Distributed Lag technique was used in the estimation. The inferences were drawn at 5% significance level. It was found that exchange rate volatility boost savings in both the short and long run while inflation retards savings in the long run over the entire political era. The effects of exchange rate volatility and inflation on savings behaviour in Nigeria across the two political eras differs only in the long run. The need to maintain stable inflation to curb the hazardous effect of oil price shocks on inflation through the diversification of the country revenue base was suggested. Also, government needs to sustain civilian rule while also implementing policies that will stimulate savings.
Keywords: Political era, Savings, Exchange rate, Inflation, Volatility.