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Dynamic Nexus between Oil Revenues and Economic Growth in Nigeria

Author

Listed:
  • Alarudeen Aminu

    (Department of Economics, Faculty of Economics, University of Ibadan, Ibadan, Nigeria)

  • Isiaka Akande Raifu

    (Department of Economics, Faculty of Economics, University of Ibadan, Ibadan, Nigeria)

Abstract

This study examines the dynamic asymmetric relationship between oil revenues and economic growth in Nigeria. Employing a Non-Linear Autoregressive Distributed Lag (NARDL) method in conjunction with an Autoregressive Distributed Lag (ARDL) method and a Threshold Autoregressive Error Correction Model (TAR-ECM) on Nigerian data, spanning the period from 1981 to 2016, the study finds that there is co-integration between oil revenues and economic growth. When the ARDL estimation method is used, we find that oil revenues have significant positive effects on economic growth in both the short-run and long-run. The results from NARDL show the existence of short-run and long-run asymmetric relationships between oil revenues and economic growth with the exception of the case in which an industrial production index is used as a proxy for economic growth. Also, the NARDL results further show that positive oil revenues are beneficial to the economy. However, the positive impact of oil revenues on the economy is gradual as shown by the results obtained from the TAR-ECM estimation method. This calls for a better management of oil revenues so as to guard against the negative impacts of oil price volatility and shortage of revenue during periods of negative developments in the oil market.

Suggested Citation

  • Alarudeen Aminu & Isiaka Akande Raifu, 2019. "Dynamic Nexus between Oil Revenues and Economic Growth in Nigeria," Economics Bulletin, AccessEcon, vol. 39(2), pages 1556-1570.
    • Handle: RePEc:ebl:ecbull:eb-18-00603
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    Cited by:

    1. Isiaka Akande Raifu & Alarudeen Aminu & Abiodun O. Folawewo, 2020. "Investigating the relationship between changes in oil prices and unemployment rate in Nigeria: linear and nonlinear autoregressive distributed lag approaches," Future Business Journal, Springer, vol. 6(1), pages 1-18, December.
    2. Young Ademola Obafemi, 2022. "Specialization Versus Diversification as Alternative Strategies for Sustainable Growth in Resource-Rich Developing Countries. Case of Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 32(3), pages 1-47, September.
    3. Olanike Bosede Awoyemi & Divine Amarachi Nwibe, 2022. "A Causal Assessment of Nigeria s Crude Oil Revenue, Health Expenditure, and Economic Growth," International Journal of Energy Economics and Policy, Econjournals, vol. 12(5), pages 420-424, September.

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    More about this item

    Keywords

    Oil Revenues; Economic Growth; ARDL; NARDL; TAR-ECM;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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