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Estimating Demand for Nutrients in Nigeria: A Vector Error Correction Model

Ogundari, Kolawole (2011): Estimating Demand for Nutrients in Nigeria: A Vector Error Correction Model.

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Abstract

This article is designed to investigate the existence of relationship between daily per capita demand for nutrients (calorie, protein, and animal fat intake) and economic growth indicator measured by per capita real Gross Domestic Products (GDP). Using annual time series data covering 1961-2007 from Nigeria, the study employed vector error correction model (VECM). The daily per capita demands for nutrients are analyzed as endogenous variables while real per capita GDP was taken as exogenous variable. These series are defined in logarithm. Preliminary investigation revealed that the series were found to be I (1) process at initial level while the series become I (0) after first differences. The trace statistics test shows that the pear of the series on the daily per capita demand for nutrients and per capita real GDP are co-integrated. Hence, the results of VECM shows that in the long-run, per capita real GDP positively and significantly impact per capita demand for nutrients in Nigeria over the years. Specifically, we observed that 1% increase in real GDP significantly increases the demand for calorie, protein and animal fat by 0.073%, 0.068%, and 0.059%, respectively. Also, the result of the short-run dynamics indicated that the speed of adjustment of the demand for calorie, protein and animal fat intake towards long-run equilibrium relationship associated with the shocks in the real GDP from the previous period is about 29%, 41% and 26%, respectively in the current period. Furthermore, we noted that the result of the impulse response function lend support to the observation that real per capita GDP increases the demand for calorie, protein, and fat intake in Nigeria. Our findings provide no support for the hypothesis that growth in real GDP is constrained by the nutrient intake in the same period.

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