An Economic Analysis of Dutch Disease in Nigeria
Gbatsoron Anjande & Aor Raymond
Department of Economics
Benue State University, Makurdi
ABSTRACT
This study is an economic analysis of Dutch disease in Nigeria from 1981-2014 adopting the co-integration regression of fully modified ordinary least squares (FM-OLS) and canonical co-integration regression (CCR) as the modeling approach. To establish the long-run convergence of the variables in the model even though they diverge in the short-run, we apply the bounds test of co-integration which reveals a co-integrating relationship among the variable. The results of the study establish the existence of Dutch disease in Nigeria within the study period. The study recommends both vertical and horizontal linkages of the oil and gas sector for effective and efficient application of oil revenue that will reverse the current Dutch disease trend in the economy. These recommendations arise from the need to efficiently utilize the available oil proceeds, given the exhaustible nature of oil resource.
Keywords: Dutch Disease, Economic Analysis, co-integration, fully modified ordinary least squares. JEL Classification: Q43, Q41,
