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Authors:
Momodu Ayodele A., Ogunbiyi, Samuel S.,& Monogbe Tunde G, Nigeria
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Abstract:
This paper seeks to illustrate the trade-off effect between the benefits of harmonization for resource allocation and its costs for inflation. From the analytical perspective of this paper, two issue are of interest; first, given the level of real government spending, one would expect harmonization to reduce inflation as the fiscal burden of rents since floating of the naira has become a centerpieces of economic restructuring programme predicated on market incentives price signals, Secondly, there is some debate about what the actual Naira-dollar rate should emerge from the float. Since the official dollar exchange was much lower than what it is currently. To conclude from this paper, we opines that it is incorrect for a developing country to ever float its currency. This decision should depend on the credibility of accompanying fiscal reform and the initial size of the premium.
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