Publications

July 26, 2016

Extra-ECOWAS Trade And Investment Flows: Any Evidence Of Business Cycles Transmission

This
study investigates the effects of merchandise trade and investment flows on the
transmission of business cycles between members of ECOWAS and the major trading
partnersbetween 1985 and 2014. Total trade and FDI significantly influence the
transmission of business cycles with elasticities of 1.1% and 0.7%,
respectively in the long run. There are little variations across the major
trading partners and other measures of trade flows. Intra-industry trade flows
with all partners, EU and USA influences the cross-country business cycles with
elasticities of 1.0%, 0.5% and 1.8%, respectively. 

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Portfolio Diversification Between Developed And Less Developed Economies

This study examines the hedging effectiveness of portfolio investment diversification between developed and developing economies; with focus on the Nigerian stock asset vis--vis the stock assets of the United States (US) and United Kingdom (UK). Its main contribution is in the analysis of optimal portfolio diversification using optimal portfolio weight (OPW) and optimal hedging ratio (OHR). Empirical findings show that the OPW and OHR are low, which indicates impressive potential gains from combining Nigerian stock assets in an investment portfolio with US and UK stock assets. In addition, exchange rate volatility is found to pose stern limitation on the potential benefits of this portfolio diversification arrangement. It is therefore recommended that the monetary authority in Nigeria should pursue policies towards reducing exchange rate volatility to the barest minimum. This will possibly attract more investors from developed economies who might be willing to combine Nigerian stock in their investment portfolio to minimize portfolio risk.

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