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This paper aims to examine Nigeria’s dynamic output and output volatility connectedness with
USA, China and India using quarterly data from 1981Q1 to 2019Q4. The study adopted the network approach of Diebold and Yilmaz
(2014) and used the normalized generalized forecast error variance decomposition from an underlying vector
error correction model to build connectedness measures. The findings show that the global financial crisis (GFC) increased the connectedness index far
more than the 2016 Nigeria economic recession. The moderate effect of the 2016 Nigeria economic recession on
the connectedness index underscores the fact that Nigeria is a small, open economy with minimal capacity to
spread output shock. For both real output and its volatility, the total connectedness index rose smoothly and
systematically through time, thereby leaving the economies more connected in the long run. To the best of the authors’ knowledge, this paper is among the first to examine Nigeria’s
dynamic output and output volatility connectedness with the USA, China and India using new empirical insights
from the GFC versus 2016 Nigerian recession. The study, therefore, concludes that the Nigerian economy should
be diversified immediately as a hedge against future real output shocks, while the USA, China and India should
maintain and sustain their current policy frameworks to remain less vulnerable to real output shocks.
