| The idea that there may exist some differences between macroeconomics in developing countries and macroeconomics in industrialized countries leads me to investigate economic fluctuations in developing countries. Nigeria embodies many issues faced by developing countries, such as "natural resource curse" problems, inconsistent policy management, macroeconomic instability, and frequent regime shifts. The assessment is complicated by, among other issues, data limitation problems. I begin with a review of the literature on the business cycle in developing countries and a brief economic history of Nigeria from 1959 to 2004. I conduct two empirical research projects which contribute to the literature. First, I develop a multivariate time series empirical model to examine economic fluctuations in Nigeria. Second, I propose an estimation strategy to analyze asymmetric effects of fiscal and monetary policy. The empirical results are robust and the findings are consistent with recent studies on developing countries. In particular, fiscal policy effectiveness is found to be asymmetric. The traditional interest rate channel is ineffective and dominated by the credit channel and asymmetric information approach. Finally, I propose future paths for further research. |
