Determinants of imports in Nigeria: A dynamic specification

Festus 0. Egwaikhide

Working Papers from African Economic Research Consortium

Abstract: This study examines the determinants of aggregate imports and its components in Nigeria between 1953 and 1989. The estimated equations rest on the stock adjustment import exchange model that has its roots in the balance of payments theory and in the consumer theory of demand as in the traditional import demand function. Quantitative estimates, based on integration and error correction specification, indicate that foreign exchange earnings, relative prices and real income all significantly determine the behaviour of total imports in the reference period. Findings also show that the short-run import decisions are determined by the dynamics of foreign exchange, which is tied to the long-run effect through the feedback mechanism. The results of the disaggregated imports also reveal the importance of foreign exchange. Thus, it is concluded that if the Nigerian government wishes to increase imports, it is essential to implement economic policies that will enhance foreign exchange availability. The near unity of the price elasticity of demand suggests that exchange rate policy can be used to influence imports in the country.

Date: 1999-03
Note: African Economic Research Consortium
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Persistent link: https://EconPapers.repec.org/RePEc:aer:wpaper:83374d7f-5699-4c00-8a83-83999571023f

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