The impacts of exchange rate and oil price on non-oil trade

Abstract

This study investigates the impacts of exchange rate and oil price on non-oil sub sector of the Nigerian economy. Autoregressive distributed lag (ARDL) was used to estimate the short-term and long-term impacts. The study found that exchange rate significantly influenced non-oil trade. The oil price has no significant impact on non-oil trade while the control variables, population and real gross domestic product (GDP) are found to be significant influencing the non-oil export. The results were robust using three different dynamic methodologies, fully modified OLS, Dynamic OLS and Canonical Cointegrating Regression (CCR). Accordingly, policy-makers should be cautious when devaluating has it been shown that exchange rate devaluation will not in favor to boost the non-oil export. Additionally, the government can encourage the available population to improve the non-oil trade especially the agricultural sector.