Macroeconomic Policies and Smuggling: An Analysis of Illegal Oil Trade in Nigeria

September 1, 1994

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Format: Chicago

Jian-Ye Wang. Macroeconomic Policies and Smuggling: An Analysis of Illegal Oil Trade in Nigeria, (USA: International Monetary Fund, 1994) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Based on a simple model, the paper provides an explanation for illegal oil trade between Nigeria and its neighboring countries. The analysis focuses on the linkages between the level of smuggling and changes in the Government’s fiscal, monetary, and domestic pricing policies. It is shown that smuggling has implications for inflation and currency depreciation. A vicious circle emerges when financial policies are expansionary and policy makers attempt to hold the domestic sale price of oil constant. Macroeconomic indicators of Nigeria over the period 1986-1993 appear to support the predictions of the model. Policy implications of the analysis are also noted.

Subject: Anti-smuggling, Commodities, Energy subsidies, Exchange rates, Expenditure, Foreign exchange, Oil, Oil prices, Prices, Revenue administration

Keywords: Anti-smuggling, CFA franc, CFA franc term, Currency price, Differential in CFA francs, Energy subsidies, Exchange rate depreciation, Exchange rates, Fiscal policy, Foreign currency terms, Naira rate, Oil, Oil price differential in CFA francs, Oil price PN, Oil prices, Price differential, Price differential in CFA franc term, U.S. dollar exchange rate, West Africa, World petroleum price, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/115
Stock No:

WPIEA1151994
ISBN:

9781451942880
ISSN:

1018-5941

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