IDEAS home Printed from https://ideas.repec.org/a/pkp/jouchl/v3y2017i1p1-15id2408.html
   My bibliography  Save this article

Implications of Crude Oil Price Volatility and Parallel Exchange Rate Fluctuation on the Cost of Living in Nigeria

Author

Listed:
  • Chimaobi V Okolo

Abstract

As the sixth largest exporter of crude oil, Nigeria heavily depends on oil earnings to fund economic activities. The country also rely heavily on imports of consumables, both oil and non oil consumables. Nigeria’s vulnerability to crude oil price shock at the international oil market exposes the nation to certain unfavourable results. The study investigated the influence of crude oil price volatility on parallel exchange rate and their influence on the cost of living and doing business in Nigeria. Two stage least square, generalized autoregressive conditional heteroscedasticity, vector error correction, impulse response and variance decomposition was employed to measure the influence of crude oil price on parallel exchange rate and their influence on cost of living in Nigeria. Crude oil price volatility negatively and significantly influenced parallel exchange rate fluctuation and consumer price index in Nigeria. Parallel exchange rate positively and significantly influenced consumer price index in Nigeria. Declining crude oil prices implies decreasing income for the Nigerian economy and in turn per capita income. Rising cost of living with declining per capita income further impoverishes Nigerians. Therefore Nigeria should effectively take control of the production of crude oil, increase her refining capacity and increase production and export of other products with comparative advantages.

Suggested Citation

  • Chimaobi V Okolo, 2017. "Implications of Crude Oil Price Volatility and Parallel Exchange Rate Fluctuation on the Cost of Living in Nigeria," Journal of Challenges, Conscientia Beam, vol. 3(1), pages 1-15.
    • Handle: RePEc:pkp:jouchl:v:3:y:2017:i:1:p:1-15:id:2408
    as

    Download full text from publisher

    File URL: https://archive.conscientiabeam.com/index.php/85/article/view/2408/3643
    Download Restriction: no
    File URL: https://archive.conscientiabeam.com/index.php/85/article/view/2408/5178
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pkp:jouchl:v:3:y:2017:i:1:p:1-15:id:2408. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dim Michael (email available below). General contact details of provider: https://archive.conscientiabeam.com/index.php/85/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.