
handle: 10419/306729
This paper estimates disaggregated import demand function for Nigeria using annual data from 1970 to 2019. The study employs the Zivot-Andrews unit root and Gregory-Hansen cointegration tests to account for the role of structural breaks and the error correction mechanism for shortrun analysis, respectively. The results show that household consumption, industrial output and domestic investment are the major determinants of import demand for consumer, intermediate and investment goods, respectively. Furthermore, the import demand for investment goods is not sensitive to variations in relative prices. However, relative prices is negative and significant to import demand for consumer and intermediate goods. Exchange rate is negative and significant only in import demand for investment goods. Moreso, structural break plays a vital role in modelling all categories of import demand in Nigeria. The study recommends that the managed floating exchange rate regime should be sustained to influence the import demand for consumer and capital goods, while the import demand for intermediate goods should be encouraged since domestic production relies heavily on imported inputs. In addition, the policymakers should take cognizance of the role of structural breaks when formulating import demand policies.
import demand function, Gregory-Hansen, ddc:330, F32, Nigeria, Zivot-Andrews, F12, F13, O24, structural breaks
import demand function, Gregory-Hansen, ddc:330, F32, Nigeria, Zivot-Andrews, F12, F13, O24, structural breaks
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