Oil Price, Exchange Rate and Asymmetric Adjustment of Nigeria's Bilateral Trade

Abstract

Motivated by the persistent rise in bilateral trade imbalance in Nigeria, this paper empirically examines whether Nigeria's four trading partners (China, India, the UK and the US) respond asymmetrically to changes in the oil price and exchange rate using a nonlinear autoregressive distributed lag model over the period from January 1999 to December 2019. Interestingly, we find that oil price increase and decrease influence Nigeria's trade balance with four trading partners asymmetrically. Further evidence indicates that oil price increases predominantly exert greater influence than decreases. Furthermore, Nigeria's trade balances with India and the UK in the long run and the US in the short run significantly respond asymmetrically to changes in exchange rate. In addition the result establishes significant evidence of the J-curve pattern in the response of Nigeria's trade balance with the UK to differences in exchange rate.

Symmetric or Asymmetric: How is Economic Growth Responding to Global Economic Uncertainty in Africa's Oil Exporters?

“…where: EPU t + = Σ t j=1 max (∆ EPU j , 0) and EPU t -= Σ t j=1 min (∆ EPU j , 0) are the partial sum processes of positive and negative changes in EPU t ; EPU 0 is the initial threshold value assumed to be zero following Ogbuabor et al (2023;2019b), Ogbonna and Ichoku (2022), Shin et al (2014), and Greenwood-Nimmo and Shin (2013); Δ is the fi rst diff erence operator; and ε t is the error term. The decomposition of EPU into partial sum processes in Equation ( 5) splits the EPU variable in the ratio 49:51 in favour of the negative regime.…”

Government Debt and Economic Freedom in the CEE countries. Less is More

“…where: EPU t + = Σ t j=1 max (∆ EPU j , 0) EPU t -= Σ t j=1 min (∆ EPU j , 0) are the partial sum processes of positive and negative changes in EPU t ; EPU 0 is the initial threshold value assumed to be zero following Ogbuabor et al (2023;2019b), Ogbonna and Ichoku (2022), Shin et al (2014), andGreenwood-Nimmo andShin (2013); Δ is the fi rst diff erence operator; and ε t is the error term. The decomposition of EPU into partial sum processes in Equation ( 5) splits the EPU variable in the ratio 49:51 in favour of the negative regime.…”

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“…In fact, it is a further pointer to the recent outcry of the depressed economic situation shown in high inflation, a spike in prices of all consumables, the poor value of the currency, depletion of the country's external reserve, and unstable oil price as corroborated in Ogbonna & Ichoku (2022), coupled with the incidence of covid 19 pandemic, insecurity, yet, mounting external and internal debt profile, among others. However, to further give room for forecasting and analysis of the dynamic impact of random disturbances subsisting between external financing and sustainable economic growth, the study performed the vector autoregressive model (Xue, 2010, Gujarati, 2009.…”