The Importance of Oil to an Export Dependent Economy: The Case of Nigeria

Abstract

The paper examines the influence of oil on an export dependent, developing economy, Nigeria. There are mixed findings in the academic literature on the effect of oil prices on exporting nations and the paper contributes to understanding these by including a measure of price uncertainty simultaneously with the level. A vector auto-regressive model includes variables measuring the foreign reserve account, exchange rate and (a proxy for) the interest rate in an examination of gross domestic product.