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The Influence of Oil Price Volatility on Selected Macroeconomic Variables in Nigeria

Author

Listed:
  • David Umoru

    (Department of Economics, Edo University, Iyamho, Edo State, Nigeria)

  • Sylvester Ohiomu

    (Department of Economics, Edo University, Iyamho, Edo State, Nigeria)

  • Richard Akpeke

    (Department of Economics, Edo University, Iyamho, Edo State, Nigeria)

Abstract

The paper analyses the influence of oil price volatility on Exchange Rate Variability, External Reserves, Government Expenditure and real Gross Domestic Product using the methodology of Vector Auto-Regressive (VAR) to carry out regression analysis, impulse response function and factor error variance decomposition for robust policy recommendations. The results of the research show that unstable oil price exerts varying degrees of deleterious effect on exchange rate variability, external reserves, Government expenditure and real gross domestic product (GDP). Based on the findings of the study, we recommend the need for the country to branch out its revenue sources. This will further shield the dangle effect of the fluctuation in prices of oil. Serious policy attention should be attached to agricultural reformation, industrial policy drives, mines and mineral development to diversify Nigeria economy following the downward slide in the oscillations in oil prices to address the problem of excessive dependence on crude oil exportation. This will help to achieve sustainable growth and development in Nigeria. Fulltext: https://doi.org/10.1515/acta-2018-0001

Suggested Citation

  • David Umoru & Sylvester Ohiomu & Richard Akpeke, 2018. "The Influence of Oil Price Volatility on Selected Macroeconomic Variables in Nigeria," Acta Universitatis Bohemiae Meridionales, University of South Bohemia in Ceske Budejovice, vol. 21(1), pages 1-22.
    • Handle: RePEc:boh:actaub:v:21:y:2018:i:1:p:1-22
    DOI: 10.1515/acta-2018-0001
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    Citations

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    Cited by:

    1. Nzeh Innocent Chile & Innocent.U. Duru & Abubakar Yusuf & Bartholomew .O.N. Okafor & Millicent Adanne Eze, 2021. "Modelling the Monetary Impact of Oil Price Volatility in Nigeria: Evidence from GARCH Models," Energy Economics Letters, Asian Economic and Social Society, vol. 8(1), pages 70-94, June.
    2. Agya Atabani Adi & Samuel Paabu Adda & Amadi Kingsley Wobilor, 2022. "Shocks and volatility transmission between oil price and Nigeria’s exchange rate," SN Business & Economics, Springer, vol. 2(6), pages 1-17, June.

    More about this item

    Keywords

    Exchange Rate Variability; External Reserve; Oil Price Volatility; Real GDP; VAR;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy

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