Imports demand behaviour and determinants: do “marshall - lerner and j – curve” effects conditions hold true in Nigeria?

Abstract

This study examines imports demand behaviour and imports determinants in Nigeria in the period between 1970 and 2024 via a Nonlinear Autoregressive Distributed Lag (NARDL) modeling technique. This study in attempt to be distinct employed the mix approach (i.e. aggregate and disaggregate imports demand approaches) to study the behavioural influencing factors of imports demand in Nigeria, having found the determinants to be cointegrated in the long run. Thus, the study found the imports and exports demand variable determinants in terms of real income (INC) and relative prices (RP) to be cointegrated in the short and long run periods. Result obtained showed that overall import and export demands are both income and price elastic in Nigeria; thus, suggesting that J-Curve effect and Marshall-Lerner conditions are met and fully satisfied in Nigeria, and that large exchange rate swings and real income changes are both highly necessary and sacrosanct in producing an appreciable trade flows and net improvement in trade balances in Nigeria. The results of this study therefore, implied that Nigerian economies’ trade balances and her net exports driven are usually perturbed by some key variable determinants in imports and exports demand namely, the real income (INC) and relative prices (RP). This study thereby, reinforces and suggests the urgent need of adequate government interventions in the Nigerian economy on issues of imports demand and trade flow drives.