Aggregate Import Demand and Expenditure Components in Nigeria

This study uses disaggregated expenditure components of total national income to determine the behaviour of imports demand in Nigeria using annual time series data and by applying the Johansen-Juselius multivariate cointegration technique tests to find out if the relevant economic variables are cointegrated in the long run. Variables used in the study are volume of imports of goods and services, consumption expenditure, expenditure on investment goods, relative prices and a dummy variable for trade liberalisation policy in Nigeria. The empirical evidence suggests that cointegrating relationship exists among the variables. The error correction estimate reveals that almost all the coefficients of the variables tested came out with a statistically positive signs. Consumption expenditure, export and investment coefficient relates positively with import implying that increase in expenditure on these leads to a significant increase in import. Generally, the result showed that import demand function and expenditure component in Nigeria has a statistically significant relationship.