Forecasting the Nigerian Gross Domestic Product in Correspondence to Crude Price Fluctuations

The study aims to find a long-run empirical correlation between crude prices and the Nigerian Economy. Therefore, Independent Variable for is natural log of Dependent would be economic activity in Nigeria (Operationalized using GDP). research explores Vector Autoregression Model (VAR Model), Serial Correlation LM Test, VAR Granger Causality/Block Exogeneity Wald Tests, Forecast Error Variance Decomposition (FEVD), Impulse Response Functions (IRFs). time period was from 1998 2008 (annual statistics were used), findings Augmented Dickey-Fuller Unit Root Test indicates that lngdp stationary an optimal maximum lag 1 1st Level, including Intercept test equation. Furthermore, found have causal impact on lncp. This finding complemented by FEVD IRFs. analyses show strong determining factor lncp fluctuations directly influences forecasts same, ceteris paribus . In final analysis, researchers recommend Central Bank Nigeria, while making policies relating growth, should involve indicators external commodity markets diversify oil-dependent economy which less susceptible Dutch Disease. Keywords: Statistical Analysis; Econometrics; Decomposition; DOI: 10.7176/RJFA/12-22-11 Publication date: November 30th 2021