Analysing Oil Price- Macroeconomic Volatility in Nigeria

Central Bank Review, 2016

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public.

International Journal of Management, Economics and Social Sciences, 2019

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public.

CBN Journal of Applied Statistics, 2013

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

ACADEMIC PUBLICATION Sonia Vihar Delhi-110094, 2021

For decades, it has become a tradition for the Nigerian economy to be exclusively dependent on crude oil and has as well become a yardstick for determining the national budget and planning, revenue sharing and the allocation of capital. Oil price shock is viewed as the unstable movement of global prices of oil. It is quite significant to assert that the determinant factors of oil price are exogenous in nature and are beyond the control of Nigeria, it thus causes stagnation in the Naira value and that Nigeria as a country does not have the potential to independently control the causes of the upward and downward movement in the oil price. Due to the significant role crude oil plays in revamping and resuscitating the country’s economy as well as its political fate, it has become the main source of generating revenue for the Nigeria economy. The fluctuations in the oil price have had a resultant multiplier effect on the activities of a country economy. Crude oil’s influence on the economic activities of Nigeria has been ascertained to be positive and negative. Its influence is positive in the sense that it presents a lot of benefits to the country in diverse means, and has negatively ended up to be a curse (Ogwumike and Ogunleye, 2008). In comparison with other African nations’ economy, the economy of Nigerian has maintained a substantial track record of growth via extensive free trade as well as privatization. The consumption of petroleum as well as total energy within the West African sub-region are continually influenced and dominated by the Nigerian economy. Notwithstanding, being a net exporter of crude oil, Nigeria keeps on relying exclusively on the returns from crude oil and as a matter of fact, it is anticipated to be affected or influence by the shock in the global price of oil. Based on the stand point of the consumer, any increase in the price of oil would in return breed inflation on the ground that if the prices of commodities manufactured by petroleum products increased. Furthermore, there will be general increase in the cost of production as well as transportation among others. In view of the perspective of the producer, most firms are faced with increased cost production/operation which has affected their profitability level adversely and has resulted in a decrease in firms’ productivity which by implication has posed adverse effects on investment and employment and as well breed inflation. Several empirical studies have adopted volatility to measure uncertainty in the price of oil Elder and Serletis (2010) and recently in the studies of Baumeister and Kilian (2016) and Demirbas et al. (2017) oil prices volatility was evidently documented. Furthermore, it has been revealed in the work of Junior and Goodness (2018) and Alley et al. (2014) that the uncertainty in the price of oil significantly influences economic activity and it is anticipated that these significance fluctuate between oil exporting and importing nations. The problem of this study takes into cognizance the essence of understanding the oil price’s influence on four basic economic components (life expectancy, education, physical quality of life, and consumption per capital) in Nigeria. Therefore, the researcher attempts to appraise the existent of association between oil price and index of economic development. The focal point of this work is to appraise the uncertainty of oil price influence on the activities of Nigerian economy with regard to human development in Nigeria. However, the specific objectives are to: ascertain how oil price uncertainty influences life expectancy in Nigeria; investigate the effect of the uncertainty of oil price on education index in Nigeria; appraise the oil price uncertainty’s influence on consumption per capital in Nigeria and assess how oil price uncertainty impacts on physical quality of life indexing Nigeria.

2016

The recent oil price shock and its effect on the stability of the Nigerian economy had led to a reawakening of the chosen theme. This study empirically examined the relationship between oil price shocks, exchange rate, external reserve and real GDP in Nigeria using data spanning from 1971Q1 to 2014Q4. The variables of interest were analyzed using Structural Vector Autoregressive (SVAR) Model. The impulse response functions as well as variance decomposition results were derived from the analysis. Some insightful findings emanated from the study. It was revealed that oil price shocks had negative effect on external reserve, exchange rate and economic growth. The negative effect of oil price shocks on external reserves and economic growth tended to be more significant in the long run. The findings of this study revealed that oil price shocks had a deleterious effect on the macroeconomic performance of Nigeria. An effective macroeconomic management is required to reduce the adverse effe...

CBN Journal of Applied Statistics, 2015

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

• Lack of incentive to contemporary agricultural economy, before British rule in Nigeria, prior independence of October 1 st , 1960; resonates to the oil wealth boom of the 1975. • Nigeria's farmers/peasantry economy denigrated, decimated, denied avalanche loan applications, underfunded by Nigeria agricultural commercial Banks, refusal & turned down qualified prospective agricultural investors who in their best interest willing to empower the forefront farmers, ready for the regenerating what was the concept of the British colonial masters legacy " multinational trading commercial company of the " United Africa Company " (U.A.C) responsible then as the blocking trading agricultural monopoly multinational Co., amongst other European rivalry justling to compete & polarize the agricultural surpluses, profit derivations & maximizations, in the British Nigerian colonial economic windfall of agricultural based economy, predominantly, aimed at fostering egalitarian measures toward cocoa prizing, penalizing companies via sanctioning or suspending companies not paling by the rules & negligibly competition, which invariably will usher efficiency & mass production in latitudinal scale; embracing inequality (upward advantage from the corporate elite companies) discouraging price manipulation & market price exploitation in the example of such classical/ancient merchant based companies were the " WAACB & WAAPB " were created in the 1940 & 1942 respectively. • A Lagos Nigerian British appointed colonial Lawyer, from the colonial office in the England, & all the trading polices were promulgated & initiated called was handed & took over by the Barrister Adeniyi Jones. He immediately cited inequality from few foreign companies & called on the Nigerian middlemen/middle class, to launch boycott & strikes specifically on the trading cocoa monopoly business. It was not on the

IOSR Journal of Economics and Finance, 2014

Nigeria being a mono-product economy, where the main export commodity is crude oil, changes in oil prices has implications for the Nigerian economy and, in particular, exchange rate movements. The latter is mostly important due to the double dilemma of being an oil exporting and oil-importing country, a situation that emerged in the last decade. The study examined the effects of oil price, external reserves and interest rate on exchange rate volatility in Nigeria using annual data covering the period 1970 to 2011. The theoretical framework of this study is based on Generalized Autoregressive Conditional Heteroskedasity modeled by Tim Bolerslev (1986) and Exponential General Autoregressive Conditional heteroskedastic modeled by Daniel Nelson (1991). These models were used to estimate the relationship between oil price changes and exchange rate. Relevant descriptive and econometric analyses were employed. The econometric tests adopted include the unit root tests, Johansen co-integration technique and the Vector Error Correction Model (VECM); the time series property examined shows that all the variables were stationary at first difference. The long run relationship among the variables was determined using the Johansen Cointegration technique while the vector correction mechanism was used to examine the speed of adjustment of the variables from the short run dynamics to the long run. It was observed that a proportionate change in oil price leads to a more than proportionate change in exchange rate volatility in Nigeria; which implies that exchange rate is susceptible to changes in oil price. The study therefore recommend that the Nigeria government should diversify from the Oil sector to other sectors of the economy so that Crude oil will no longer be the mainstay of the economy and frequent changes in crude oil price will not influence exchange rate volatility significantly in Nigeria.

Journal of Social and Economic Statistics, 2016

Milton Friedman's permanent income hypothesis suggests that frictionless open economies with depletable natural resources should increase its external reserves with most of the resource windfalls. Nigeria like any other country endowed with natural resources such as crude oil and liquefied natural gas are often faced by the Dutch disease. The evolution of the Nigeria's foreign exchange market has been influenced by the changing pattern of international trade, institutional changes in the economy and structural shifts in production. The increased export of crude oil followed by the sharp fall in its prices, and enhanced official foreign exchange receipts should give the government a wakeup call. This study focuses on macroeconomic behavior in the presence of crude oil price volatility. The dataset covered the period of 1970-2014, using OLS model. Given the high degree of dependency and contribution crude oil has on Nigeria's revenue generation, this analysis reveals crude oil price to be having a positive impact on Nigeria's economic wellbeing. A 1% increase in its price has an impact of 0.67% increase in GDP. Adding-up all other analyzed variable, crude oil still stand as the mean influential factor to the Nigerian economic development. Therefore, it is of optimum important to quickly diversify the economy, to prevent the repercussion of crude oil price shock, and also heavily invest in the development of infrastructural facilities to create the enabling environment for a non-oil economy.

A time series and country specific variables from 1980 to 2011 was used to conduct the empirical analysis of macroeconomic factors with respect to crude oil prices in Ghana. A robust methodology rooted in Granger causality test was conducted. Generally the study results indicate that there was significant long run relationship among GDPGR and the other macroeconomic variables such that long run movements in LOP and REER significantly explained movements in the GDPGR. Also, there was significant short run relationship between GDPGR and the other macroeconomic variables in such a way that short run movements in the world crude oil price significantly explained movements in the GDPGR with short run movement in the REER explaining movements in the GDPGR.