Time Series Analysis of Currency in Circulation in Nigeria

Abstract

This paper discussed the levels and trend of Currency In Circulation (CIC) in Nigeria. The relevance of this study lies in the fact that it could help monitor the CIC and give early warning signals about any economic crisis that may due to inflation. Monthly data on CIC in Nigeria  for the period January 2010 to December 2014 was obtained from the Central Bank of Nigeria (CBN) statistical bulletin. The CIC data was Seasonally non Seasonally differenced to remove Seasonality and the trend. The appropriate model that best described the pattern in the series was the Multiplicative Seasonal Autoregressive Moving Average (SARIMA) model, SARIMA (0,1,0)x(0,1,1)_12.

Keywords: Currency in Circulation, Liquidity, Moving average process, Variance stability