Abstract:
The choice and management of an exchange rate regime is a critical aspect of economic management to
safeguard competitiveness, macroeconomic stability, and sustainable development. But rather, the country has
continued to be at disadvantage in terms of macroeconomic performances as the different regimes have been
accompanied by instability and uncertainties, hence the need for the present study to examine the relationship
between exchange rate regimes and output growth in Nigeria in different periods from 1970 to 2014. The study
employs the Generalized Method of Moments (GMM) to estimate economic growth equation as a result of
endogennity problem. In contrast with previous findings, ours study strongly suggest that exchange rate regimes
indeed matter in terms of real economic performance in Nigeria as the results reveal that deregulated exchange
rate regime spur economic growth in Nigeria as against the whole period and fixed exchange rate regime. All in
all, the findings suggest that fixed exchange rates constrain the performance of the Nigerian economy as real
exchange rate depicts inverse relationship with economic growth during the whole period and period of fixed
exchange regime. It is against this background, that we recommend the sustainability of the regime of exchange
rate liberalization that has been in operation from 1986
