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US oil supply shocks and economies of oil-exporting African countries: A GVAR-Oil Resource Analysis

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  • Umechukwu, Chisom
  • Olayungbo, D.O.

Abstract

This study examined the effects of US Shale-oil supply which started in 2013. The study employed GVAR-Oil resource model from the first quarter of 1980 to the fourth quarter of 2018 for 36 trading countries with special focus on 4 oil-exporting African countries. Given that shale supply is a recent phenomenon, we estimated two models to capture these effects. The first model spanned from 1980 to 2013, while the second model was from 1980 to 2018. After implementing the preliminary tests of optimal lag length selection, cointegration test and the weak exogeneity test, we conducted the persistence profile to find Egypt and Gabon adjust to US oil supply shocks faster than Algeria while Nigeria did not. The result of the generalized impulse response functions showed negative effects of the US shale oil supply in Egypt, positive effects in Nigeria and Gabon but insignificant in Algeria. The generalized forecast variance error decomposition function conducted found output of China, Japan, US, Europe, Asia and Latin America respectively to contribute the largest variations in oil supplies during the study period. African countries, on the other hand, were found to contribute in small proportion. We recommended that robust oil savings funds by oil-exporting African countries can act as buffers against oil supply shocks.

Suggested Citation

  • Umechukwu, Chisom & Olayungbo, D.O., 2022. "US oil supply shocks and economies of oil-exporting African countries: A GVAR-Oil Resource Analysis," Resources Policy, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:jrpoli:v:75:y:2022:i:c:s0301420721004888
    DOI: 10.1016/j.resourpol.2021.102480
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    More about this item

    Keywords

    US Shale oil; Output; Weak exogeneity; GVAR-Oil model; African oil exporting countries;
    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
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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