Effects of Export, Import and Inflation on Output Expansion.
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Date
2005
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Publisher
Esxon Publishers
Abstract
This paper defines the family of VARs with block exogeneity to reconnoiter the effects of export and import of goods and services, inflation on output expansion within a multivariate cointegration and error correction structure in Nigeria, over the period 1960-2014. The investigation showed that the indicators are I(1) and moderate correlation was observed amongst the indicators; but any correlation with LINF is negative. LP and LEXPGS are block recursive in time series sense at 0.5138 and 0.4232 levels of significance respectively. LP is not influenced by LIMGS, LEXPGS and LINF. Unidirectional causality was detected from LP and LEXPGS to LIMGS and from LIMGS and LEXPGS to LINF. Normalized cointegration coefficients showed that LIMGS and LINF contributed negatively to LP, while LEXPGS contributed positively to LP in the
long-run. The static forecasts from our VECM subsequently recover and tracked the trends reasonably well for the periods considered. Our assessment supports the export-led expansion hypothesis which suggests opening native markets to foreign
competition in exchange for market access in other countries. Nigeria’s over dependence on crude oil export is treacherousbecause crude oil is a deteriorating benefit with proven fallback which would eventually become exhausted and the impulses
of the oil market has resulted in a significant decline in the paychecks because of the exogenously determined price of crude oil. Thus, promoting non-oil export products will bring about a reduction of the nation’s level of dependence on crude oil
export.
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Keywords
Block exogeneity, I(1), Export-led Output expansion, VECM