Document Type

Honors Thesis


Over the years, the value of Nigerian currency, the naira, has declined against the United States dollar by over 50%, a move that has impacted the Nigerian people, sometimes negatively. There are several different possible reasons why the naira has depreciated against dollar. In an attempt to identify potential causes, historical data will be used to derive an empirical model. The empirical model is based on three important longrun equilibrium relationships in international economics, purchasing power parity (PPP), uncovered interest parity (UIP) and stable money demand. The evidence presented suggests an important role for the Nigerian income, United States money supply and interest rate. Of less importance are inflation rates.

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