Thepaper examines the effects of United States productivity shock on components ofNigeria’s external sector. Using a structural Macroeconomic Model (SMM), thepaper modelled Nigeria’s external sector by using ten behavioural equations andfour identities. The SMM was simulated, using a 3% increase and 3% decrease inUS productivity to elicit responses of Nigeria’s external sector components tothis shock. Using quarterly data from 1981 to 2015, the paper found that bothpositive and negative US productivity shocks elicited symmetrical responsesfrom Nigeria’s external sector components. Also, both positive and negativeshocks had little effects on Nigeria’s current account balance, imports,exports, foreign direct investments and reserves. However, positive shocksincreased remittances inflow, a depreciation in nominal exchange rates, a reductionin foreign portfolio investment position, and a reduction in foreign debtflows. The responses for a negative US productivity shock were just the direct oppositeof a positive shock. Our finding shows that, thecomponents of Nigeria’s external sector will respond in like manner to bothpositive and negative shocks to United States productivity.
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