“The purpose of the study is to explore the association between export earnings
fluctuations and capital formation in Nigeria. In doing so, the study presents three novelties. First, the standard transmission channels of fluctuations in export earnings on growth—hypothesized to deter investment — and the transmission channel of the permanent income literature—hypothesized to ease investment—are taken into account simultaneously within an integrated theoretical setting and not, as has generally been done, within an ad hoc specification. Second, the focus is on the link between fluctuations in export earnings and the formation of capital, which is more direct. Third, the relationship is tested in a country approach method as opposed to the usual cross-country analyses.”
