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Asymmetric and Dynamic Effects of Oil Price Shocks and Exchange Rate Fluctuations: Evidence from a Panel of Economic Community of West African States (ECOWAS)

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  • Abimelech Paye Gbatu

    (Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, China,)

  • Zhen Wang

    (China Center for Energy Economics Research, College of Economics, Xiamen University, Xiamen 361005, China.)

  • Presley K. Wesseh, Jr

    (China Center for Energy Economics Research, College of Economics, Xiamen University, Xiamen 361005, China.)

  • Isaac Yak Repha Tutdel

    (Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, China,)

Abstract

Researches intended to influence key decisions on energy policy are paramount for Economic Community of West African States (ECOWAS ) development agenda. Therefore, we employ fixed effect model to examine the impacts of oil price shocks and exchange rate volatility (erv) on real gross domestic product (rgdp) in the ECOWAS countries. For each oil price shock, three equations are estimated: The sample of all ECOWAS countries and the samples with net-oil exporters and net-oil importers. The empirical results provide evidences of both linear and asymmetric effects of oil price shocks on rgdp for the full ECOWAS sample and for the net-oil importers. Additionally, there are evidences that erv negatively and significantly influence rgdp of the full ECOWAS sample and the net-oil importers. Therefore, we recommend the implementation of economic diversification policy away from oil reliance toward dependence on other energy types, and implementation of monetary policies to stabilize volatile exchange rate regime in oil-importing ECOWAS countries.

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  • Abimelech Paye Gbatu & Zhen Wang & Presley K. Wesseh, Jr & Isaac Yak Repha Tutdel, 2017. "Asymmetric and Dynamic Effects of Oil Price Shocks and Exchange Rate Fluctuations: Evidence from a Panel of Economic Community of West African States (ECOWAS)," International Journal of Energy Economics and Policy, Econjournals, vol. 7(3), pages 1-13.
    • Handle: RePEc:eco:journ2:2017-03-01
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    More about this item

    Keywords

    Asymmetry; Economic Community of West African States Countries; Exchange Rate Volatility; Oil Price Shocks;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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