Abstract
Revenue generated from crude oil exports has been an important source of foreign exchange required for development in most net oil exporting developing countries. As a result, development planning in these nations require a thorough understanding of the linkages that usually exist between the oil sector and the rest of the economy. We used a macro-economic/optimization model to study the impacts of the developments in the oil market on the Nigerian economy. The modelling technique involve the building of a two sector macroeconomic model (oil and non-oil sectors) which is then employed together with a social welfare maximization objective function to formulate an optimal control problem for the economy. The need to have a balance of payment situation during the planning period was incorporated as a constraint in the formulation. The model was used to evaluate the optimal path of real imports during the decade of the 1970 in Nigeria, as well as the path of the macroeconomy in the future.
Published Version
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