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The Moderating Role of Corruption in the Oil Price-Economic Growth Relationship in an Oil-Dependent Economy: Evidence from Bootstrap ARDL with a Fourier Function

Author

Listed:
  • Joseph David

    (Pan-Atlantic University, Lagos, Nigeria)

  • Nurudeen Abu

    (Department of Economics, Baba-Ahmed University, Kano, Nigeria)

  • Akintola Owolabi

    (Lagos Business School, Pan-Atlantic University, Lagos, Nigeria)

Abstract

This study employs the recently proposed bootstrap autoregressive distributed lag (ARDL) model, augmented with a Fourier function, and the dynamic ARDL simulation procedures, to examine whether the oil price economic growth relationship depends on the level of corruption in an oil-dependent economy. Using Nigerian quarterly data from the 1996Q1–2021Q4 period, the results of the bounds-testing provide evidence of cointegration between the variables. In addition, the results indicate that oil price and corruption are growth-enhancing, but the effect of oil price on growth is contingent on the level of corruption. Moreover, evidence suggests that the marginal effect of oil price on economic growth varies with the level of corruption: the lower the level of corruption, the higher the growth-enhancing effect of oil price on economic growth, and vice versa. The dynamic ARDL simulation plots demonstrate a significant increase (decrease) in predicted growth in the short term due to a counterfactual rise in the price of oil (corruption), which gradually deflates (increases) after the shock in the long term. Therefore, policies geared toward diversifying the economy away from oil, reducing corruption in the oil and gas industry and the security sector, improving agricultural output, and reducing the unemployment rate are recommended to enhance growth.

Suggested Citation

  • Joseph David & Nurudeen Abu & Akintola Owolabi, 2025. "The Moderating Role of Corruption in the Oil Price-Economic Growth Relationship in an Oil-Dependent Economy: Evidence from Bootstrap ARDL with a Fourier Function," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 5-30, March.
    • Handle: RePEc:nwe:eajour:y:2025:i:1:p:5-30
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    References listed on IDEAS

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    More about this item

    Keywords

    economic growth; corruption; oil price; bootstrap ARDL; fractional flexible Fourier forms ARDL; dynamic ARDL simulation;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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