Estimating Aggregate Import-Demand Function for Nigeria Revisited

This study estimates the aggregate import demand function for Nigeria for the period of 1980 2010. Cointegration approach was implemented. While the error correction term in the estimated VEC model was evaluated for long run causal relationship, the short term coefficients were gauged for short term causal relationship between the explained and the explanatory variables. Results indicate: (i) the existence of an underlying long-run stationary steady state relationship between import demand and real exchange rates, world price index and disposable in Nigeria. (ii) Real exchange rates, world price index, disposable income and the structural adjustment policy, jointly significantly cause import demand on the long run in Nigeria with causality running from the explanatory variables to imports. (iii) In the short run, all the explanatory variables of interest, real exchange rate, world price index and disposable income, severally do not significantly cause import demand in Nigeria. These suggest that these variables may not be effective instruments for the management of developments in import demand index in the short run, rater, a long term comprehensive policy options may be more efficient and effective in the management of import demands in Nigeria.