Output Composition of the Manufacturing Sector and Household Consumption in Nigeria: Evidence from A Vector Autoregressive Approach

This study investigated the effect of the different composition of manufacturing output on household consumption in Nigeria. A Vector Autoregressive (VAR) Approach was used. Annual time series data for the study covering the period 1970-2008 were extracted from the Central Bank of Nigeria Statistical Bulletin. The variance decomposition results reveal that bear and stout manufacturing had the largest shock to household consumption. This was also confirmed by the estimated VAR result that bear and stout manufacturing had a significantly positive effect on household consumption. Per capita GDP was found to have insignificant effect on household consumption. Researchers therefore recommend that policies aimed at bolstering other manufacturing composition to diversify the economy be pursed such as creating the right environment as such will enhance per capita income of the household.