Understanding the Empirical Relationshipsbetween Exports Volatility and Dynamics of Current Account Balance in Nigeria

International Journal of Economics and Management Studies

© 2019 by SSRG - IJEMS Journal

Volume 6 Issue 8

Year of Publication : 2019

Authors : JohnboscoChukwumaOzigbu

10.14445/23939125/IJEMS-V6I8P114

How to Cite?

JohnboscoChukwumaOzigbu, "Understanding the Empirical Relationshipsbetween Exports Volatility and Dynamics of Current Account Balance in Nigeria," SSRG International Journal of Economics and Management Studies, vol. 6,  no. 8, pp. 129-135, 2019. Crossref, https://doi.org/10.14445/23939125/IJEMS-V6I8P114

Abstract:

This paper provides empirical evidence that links exports and current account balance in Nigeria between 1981 and 2018.Exports was segmented into oil and non-oil exports and introduced into the model as explanatory variables in addition to exchange rate. Data on the underlying variables were sourced from the Central Bank of Nigeria Statistical Bulletin and analysed using Autoregressive Distributed Lag (ARDL) model, descriptive statistics, unit root test and cointegration tests amongst others. The unit root test results reveal that the variables are mixed integrated. It was also found from the ARDL bounds test that the variables have long run relationship. The estimated ARDL model shows that oil exports have significant positive relationship with current account balance in both short run and long run. On the basis of the findings, this paper concludes that, on balance, oil exports play an important role in boosting the current account balance and providing platform for achieving favourable balance of payments position in the long run. Thus, this paper recommends for the diversification of the export base to ensure that Nigeria adequately tap into the other productive non-oil sectors of the economy while boosting oil production in order to revamp total exports and boost current account balance.

Keywords:

Current account balance, oil exports, non-oil export, exchange rate, ARDL and Nigeria.

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