Oil Price, Exchange Rate and Non-Oil Export in Nigeria : A SVAR Analysis

This study empirically examined the relationship among oil price, exchange rate and non-oil export in Nigeria using a Structural Vector Auto-Regression (SVAR) model for the period 1986Q1 to 2011Q4. The study observed that innovations to international oil price resulted in appreciation of the domestic exchange rate while innovations to exchange rate resulted in a decline in non-oil export - a clear reflection of the Dutch Diseases Syndrome. Based on these findings, the study recommended the need for prudent management of oil windfall resulting from positive oil price shocks through investment in non-oil sector of the economy, by providing essential infrastructures and incentives to potential investors which will stimulate the performance of the non-oil sector.