Sectoral contributions to Nigerian gross domestic product using a VAR approach

Abstract

This study analyzed sectoral contributions to Gross Domestic Product by Agriculture, Industry and services sectors of the economy using a Vector Autoregressive (VAR) approach. The test of stationarity using Augmented Dickey Fuller (ADF) showed that all the variables were integrated of order one. Granger causality was used to find the linkages among the variables under consideration. The result showed bilateral causality between GDP and sectoral contribution to GDP by Industry. Thereafter the unrestricted VAR parameter estimate was obtained for GDP and sectoral contribution to GDP by Industry. In conclusion, it is recommended that the Nigerian government should come up with strategic master plan to diversify the economy using the Agriculture and services sectors since the Nigerian economy from our analysis is grossly dependent on sectoral contributions of Industry to GDP.

KEYWORDS: Granger causality, Unit root, VAR model and sectoral contribution