Trade Openness and Economic Performance: Empirical Evidence from Nigeria

With the advent of recession which eventually led to the debt crisis in 1986, Nigeria embarked on trade openness polcies in an attempt to jump-start the economy.  This paper examines the relationship between trade openness and economic performance in Nigeria since 1986.  The results of recent studies have been mixed.  Our period of analysis focused on the trade liberalization (post-SAP) era in Nigeria ranging from 1986 to 2015.  The Johansen cointegration and VECM techniques were adopted to ascertain whether a long run and short run causal relationship exist among the variables in the model.  Annual data were obtained from the World Bank’s World Development Indicators.  Our findings suggest that there is a long run relationship among variables in the study, meaning the variables (economic growth, trade openness, private capital by depository institutions, government expenditure, and capital formation) will tend to move closer together in the long run.   However, the results did not validate the existence of a long run causal relationship running from the explanatory variables to economic growth.  Also, the results did not show any short run causal relationship running from each of the explanatory variable, including trade openness, to economic growth for Nigeria.  As such, the suggestion therefore is that trade openness could be beneficial to the Nigeria economy on the condition that economic policies enacted need to, first, focus on in-ward looking developing strategies to enable factors that would eventually complement sustainable growth. Keywords: Trade Openness, Economic Growth, Johansen Cointegration, Vector error-correction model, Nigeri

Exchange rate market efficiency: further evidence from cointegration tests

This paper examines the hypothesis that foreign exchange market is efficient. Several empirical results from earlier studies have been based on the implicit assumption that time-series data are stationary. But we use cointegration techniques, which imply that time-series data are non-stationary, to test for market efficiency, using Japanese data drawn from the Wall Street Journal. Our results suggest that the Japanese foreign exchange market is inconsistent with the efficiency hypothesis.

Aggregate health care expenditure in the United States: new results

This research note, upon rectifying some inadvertently transposed entries in the observation matrix which was used in the authors' original article (Murthy and Ukpolo, 1994), using the maximum likelihood technique investigates whether in the United States during the period 1960-87, real per capita health care expenditure is related to real per capita income, the age structure of the population, number of practicing physicians, the relative price of health care and the ratio of public health care expenditure to total health care expenditure. While new results reveal the presence of two cointegrating vectors, the basic findings are consistent with the empirical evidence reported in the original paper.

Foreign aid and economic growth in Cameroon: evidence from cointegration tests

Mbaku (1993, 1994) presents empirical evidence to support the hypothesis that in Cameroon, during 1971-90, foreign aid had no impact on economic growth. In this note, we apply the recent technique of unit-root testing and Johansen's maximum likelihood procedure to show, on the contrary, that foreign aid had a positive contribution to economic growth in Cameroon during the period under study. We attribute the differences in the results to the differences in methodology, and the implied optimal lag structure in our study. We contend that cointegration tests are warranted in studies of this nature, before any structural analysis and policy implications of the model, are derived.