Remodelling Macroeconomic Trilemma and Central Bank Behaviour in Nigeria: A Markov-Switching Approach

Remodelling Macroeconomic Trilemma and Central Bank Behaviour in Nigeria: A Markov-Switching Approach | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Remodelling Macroeconomic Trilemma and Central Bank Behaviour in Nigeria: A Markov-Switching Approach Taofeek Olusola AYINDE, Abiodun S., BANKOLE This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-70015/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This study investigates macroeconomic trilemma and Central Bank behavior in Nigeria. The period of investigation spans the quarterly period of 1981–2017. Upon the data stability condition of Zivot-Andrew unit-root test with structural breaks, the Markov Switching Dynamic Regression was employed as the technique of analysis. With a validated trilemma hypothesis, the study found that the trilemma constraints hold for the Nigerian economy but at the expense of the autonomy of the monetary authority. Being the policy variable of the Central Bank of Nigeria, the exchange rate was found to follow two regimes of fixed and managed-float regimes. The results also showed that political risk was found insensitive to the regimes of exchange rate while the foreign sector was considered as a moderating factor for the behavior of the monetary authority; irrespective of the exchange rate regime. JEL Classifications: F41, E32, E52, C22, E58. Macroeconomics Financial Openness Business Fluctuations Monetary Independence Markov Switching Regression Central Bank Behaviour Figures Figure 1 Figure 2 Full Text Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-70015","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research","associatedPublications":[],"authors":[{"id":2024854,"identity":"98d9f767-097b-4b2b-bbe5-6047065224ed","order_by":0,"name":"Taofeek Olusola 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The period of investigation spans the quarterly period of 1981–2017. Upon the data stability condition of Zivot-Andrew unit-root test with structural breaks, the Markov Switching Dynamic Regression was employed as the technique of analysis. With a validated trilemma hypothesis, the study found that the trilemma constraints hold for the Nigerian economy but at the expense of the autonomy of the monetary authority. Being the policy variable of the Central Bank of Nigeria, the exchange rate was found to follow two regimes of fixed and managed-float regimes. The results also showed that political risk was found insensitive to the regimes of exchange rate while the foreign sector was considered as a moderating factor for the behavior of the monetary authority; irrespective of the exchange rate regime.\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eJEL Classifications:\u0026nbsp;\u003c/strong\u003eF41, E32, E52, C22, E58.\u003c/p\u003e","manuscriptTitle":"Remodelling Macroeconomic Trilemma and Central Bank Behaviour in Nigeria: A Markov-Switching Approach","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2020-09-08 17:00:35","doi":"10.21203/rs.3.rs-70015/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"1fef2085-0fdd-41c9-9c6a-900f2f27e053","owner":[],"postedDate":"September 8th, 2020","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[{"id":452080,"name":"Macroeconomics"}],"tags":[],"updatedAt":"2022-10-31T17:23:40+00:00","versionOfRecord":[],"versionCreatedAt":"2020-09-08 17:00:35","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-70015","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-70015","identity":"rs-70015","version":["v1"]},"buildId":"ApUGefWb6u5IBVtyqm6d5","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}