Vector Auto regressive model and the Nigerian Economy

Abstract

This paper provides analytical relationship between oil exports, oil price, exchange rate and Gross Domestic Product (GDP). The objective is to find the effect of oil price on other macroeconomic variables.Vector Auto Regressive (VAR) model was used to test for both shortrun and longrun relationship among the variables in the model.It was also found that there is no significant relationship between GDP and EXG and OE. Meaning that no any shortrun or longrun relationship. EXG is negatively related to GDP and OE. This according to the researcher has a policy implication interms of either collection of the revenue.The economy favours importers than exporters or through the appreciation of the dollar as a standard currency world wide, the Naira has low value in the international market exchange. At the same time Nigerian government policy favors importers into the country than encouraging exports due to failure in the provision of basic infrastructures and power needed for production.