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Oil price fluctuations and the Nigerian economy

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  • O. Felix Ayadi

Abstract

The single most important issue confronting a growing number of world economies today is the price of oil and its attendant consequences on economic output. Several studies have taken the approach of Hamilton (1983) in investigating the effect of oil price shocks on levels of gross domestic product. The focus of this paper is primarily on the relationship between oil price changes and economic development via industrial production. A vector auto regression model is employed on some macroeconomic variables from 1980 through 2004. The results indicate that oil price changes affect real exchange rates, which, in turn, affect industrial production. However, this indirect effect of oil prices on industrial production is not statistically significant. Therefore, the implication of the results presented in this paper is that an increase in oil prices does not lead to an increase in industrial production in Nigeria. Copyright 2005 Organization of the Petroleum Exporting Countries.

Suggested Citation

  • O. Felix Ayadi, 2005. "Oil price fluctuations and the Nigerian economy," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 29(3), pages 199-217, September.
  • Handle: RePEc:bla:opecrv:v:29:y:2005:i:3:p:199-217
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    Cited by:

    1. Hamdi, Helmi & Sbia, Rashid, 2013. "Dynamic relationships between oil revenues, government spending and economic growth in an oil-dependent economy," Economic Modelling, Elsevier, vol. 35(C), pages 118-125.
    2. Wu, Man-Hwa & Ni, Yen-Sen, 2011. "The effects of oil prices on inflation, interest rates and money," Energy, Elsevier, vol. 36(7), pages 4158-4164.
    3. AfDB AfDB, 2007. "Working Paper 93 - The Impact of High Oil Prices on African Economies," Working Paper Series 2306, African Development Bank.
    4. Magnus Abeng, 2016. "Analysis of the Effect of Oil Price Shock on Industry Stock Returns in Nigeria," EcoMod2016 9285, EcoMod.
    5. Zahid Muhammad & Hassan Suleiman & Reza Kouhy, 2011. "Exploring oil price – exchange rate nexus for Nigeria," FIW Working Paper series 071, FIW.
    6. repec:eco:journ2:2017-03-01 is not listed on IDEAS
    7. Njindan Iyke, Bernard, 2016. "Real Output and Oil Price Uncertainty: Evidence from an Oil Producing Country," MPRA Paper 71307, University Library of Munich, Germany, revised 01 Apr 2016.
    8. Jeetendra Khadan, 2016. "An Econometric Analysis of Energy Revenue and Government Expenditure Shocks on Economic Growth in Trinidad and Tobago," IDB Publications (Working Papers) 97018, Inter-American Development Bank.
    9. Hervé Alexandre & Antonin De Benoist, 2017. "Petrol Prices and Government Bond Risk Premium," Working Papers hal-01620808, HAL.
    10. Ding, Liang & Vo, Minh, 2012. "Exchange rates and oil prices: A multivariate stochastic volatility analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(1), pages 15-37.
    11. AfDB AfDB, 2007. "Working Paper 93 - The Impact of High Oil Prices on African Economies," Working Paper Series 2226, African Development Bank.
    12. Oriakhi D.E & Iyoha Daniel Osaze, 2013. "Oil Price Volatility and its Consequences on the Growth of the Nigerian Economy: An Examination (1970-2010)," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(5), pages 683-702, May.
    13. repec:eco:journ1:2017-02-16 is not listed on IDEAS

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