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Where do real output shocks to Nigeria mainly emanate from? Empirical analysis of Nigeria-China-India-USA economic interactions

Author

Listed:
  • Orji Anthony

    (Department of Economics, University of Nigeria, Nsukka, Nigeria)

  • Nwodo Ikenna Paulinus

    (Department of Economics, University of Nigeria, Nsukka, Nigeria)

  • Ogbuabor Jonathan E.

    (Department of Economics, University of Nigeria, Nsukka, Nigeria)

  • Anthony-Orji Onyinye I.

    (Department of Economics, University of Nigeria, Nsukka, Nigeria)

Abstract

This study investigated Nigeria's economic interactions with China, India, and the USA with a view to identifying the main source of real output shock to Nigeria in the period 1981Q1-2019Q4. The analysis followed the network approach of Diebold and Yilmaz (2014), which uses the size and direction of normalized generalized forecast error variance decompositions (NGFEVD) of a vector error correction model to track shock propagation among economic entities. The results indicate that China and India are net transmitters of real output shocks to Nigeria. The results also indicate that Nigeria is a net real output shock receiver. The study concludes that Nigerian policymakers should evolve policies that can insulate the economy against real output shock heatwaves from around the world, especially China and India. Such policies should mainly target the diversification of the economy such that crude oil will no longer be the only major source of revenue.

Suggested Citation

  • Orji Anthony & Nwodo Ikenna Paulinus & Ogbuabor Jonathan E. & Anthony-Orji Onyinye I., 2022. "Where do real output shocks to Nigeria mainly emanate from? Empirical analysis of Nigeria-China-India-USA economic interactions," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 32(1), pages 58-77, March.
    • Handle: RePEc:vrs:suvges:v:32:y:2022:i:1:p:58-77:n:5
    DOI: 10.2478/sues-2022-0004
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    More about this item

    Keywords

    Output Shock Transmission; Network Approach; VAR Model; Nigeria;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

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