IDEAS home Printed from https://ideas.repec.org/a/aes/jsesro/v5y2016i1p56-66.html
   My bibliography  Save this article

Crude Oil Price Shocks And Macroeconomic Behavior In Nigeria

Author

Listed:
  • Emmanuel Olusegun STOBER

    (Associate Professor, PhD, senior researcher, Department of Statistics and Econometrics, Bucharest University of Economic Studies, National Scientific Institute of Labour and Social Protection)

Abstract

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

Suggested Citation

  • Emmanuel Olusegun STOBER, 2016. "Crude Oil Price Shocks And Macroeconomic Behavior In Nigeria," Journal of Social and Economic Statistics, Bucharest University of Economic Studies, vol. 5(1), pages 56-66, JULY.
  • Handle: RePEc:aes:jsesro:v:5:y:2016:i:1:p:56-66
    as

    Download full text from publisher

    File URL: http://www.jses.ase.ro/downloads/Vol5NO1/Stober.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Araujo, Juliana D. & Li, Bin Grace & Poplawski-Ribeiro, Marcos & Zanna, Luis-Felipe, 2016. "Current account norms in natural resource rich and capital scarce economies," Journal of Development Economics, Elsevier, vol. 120(C), pages 144-156.
    2. Yongzheng Yang & Hong Chen & Shiu raj Singh & Baljeet Singh, 2013. "The Pacific Speed of Growth: How Fast Can It Be and What Determines It?," IMF Working Papers 2013/104, International Monetary Fund.
    3. Mr. Suman S Basu & Jan Gottschalk & Mr. Werner Schule & Mr. Nikhil Vellodi & Ms. Susan S. Yang, 2013. "The Macroeconomic Effects of Natural Resource Extraction: Applications to Papua New Guinea," IMF Working Papers 2013/138, International Monetary Fund.
    4. Mr. Marcelo Martinez & Mr. Montfort Mlachila, 2013. "The Quality of the Recent High-Growth Episode in Sub-Saharan Africa," IMF Working Papers 2013/053, International Monetary Fund.
    5. Ms. Janet Gale Stotsky & Mr. Manuk Ghazanchyan & Mr. Olumuyiwa S Adedeji & Mr. Nils O Maehle, 2012. "The Relationship Between the Foreign Exchange Regime and Macroeconomic Performance in Eastern Africa," IMF Working Papers 2012/148, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Emmanuel Olusegun Stober, 2017. "Are We There Yet?," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(4), pages 68-76, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simplice Asongu & Nicholas Odhiambo, 2017. "Mobile banking usage, quality of growth, inequality and poverty in developing countries," Working Papers of the African Governance and Development Institute. 17/046, African Governance and Development Institute..
    2. Allegret, Jean-Pierre & Couharde, Cécile & Coulibaly, Dramane & Mignon, Valérie, 2014. "Current accounts and oil price fluctuations in oil-exporting countries: The role of financial development," Journal of International Money and Finance, Elsevier, vol. 47(C), pages 185-201.
    3. Simplice Asongu & Ndemaze Asongu, 2018. "The comparative exploration of mobile money services in inclusive development," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 45(1), pages 124-139, January.
    4. Minghua Chen & Qian Li & Bianxiu Zhang & Linxiao Xie & Jianxu Liu & You Geng & Zhirui Liu, 2023. "The Spatial Correlation Network of China’s High-Quality Development and Its Driving Factors," Sustainability, MDPI, vol. 15(22), pages 1-22, November.
    5. Simplice Asongu & Jacinta Nwachukwu, 2016. "Welfare Spending and Quality of Growth in Developing Countries: A Note on Evidence from Hopefuls, Contenders and Best Performers," Working Papers of the African Governance and Development Institute. 16/028, African Governance and Development Institute..
    6. Ms. Xin Cindy Xu & Ahmed El-Ashram & Judith Gold, 2015. "Too Much of a Good Thing? Prudent Management of Inflows under Economic Citizenship Programs," IMF Working Papers 2015/093, International Monetary Fund.
    7. Montfort Mlachila & René Tapsoba & Sampawende J. A. Tapsoba, 2017. "A Quality of Growth Index for Developing Countries: A Proposal," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(2), pages 675-710, November.
    8. Brito, Joao, 2015. "Country Size and Determinants of Economic Growth: A Survey with Special Interest on Small States," MPRA Paper 61273, University Library of Munich, Germany.
    9. Liu, Kai & Poplawski-Ribeiro, Marcos, 2015. "Short- and Long-Run Fiscal Elasticities: International Evidence," MPRA Paper 65950, University Library of Munich, Germany.
    10. Cha'ngom, Narcisse & Tamokwe Piaptie, Georges Bertrand, 2018. "Les transferts de fonds des migrants contribuent elles à l'inclusivité de la croissance en Afrique Subsaharienne? [Do remittances contribute to inclusive growth in Subsaharan Africa?]," MPRA Paper 91321, University Library of Munich, Germany.
    11. Yang Qi & Mingyue Gao & Haoyu Wang & Huijie Ding & Jianxu Liu & Songsak Sriboonchitta, 2023. "Does Marketization Promote High-Quality Agricultural Development in China?," Sustainability, MDPI, vol. 15(12), pages 1-28, June.
    12. Boyang Zhou & Nan Wang & Zhen Zhang & Wenxin Liu & Weinan Lu & Ruifan Xu & Linfei Li, 2022. "Research on the Spatial-Temporal Differentiation and Path Analysis of China’s Provincial Regions’ High-Quality Economic Development," Sustainability, MDPI, vol. 14(10), pages 1-26, May.
    13. Ramesh C Paudel, 2014. "Export performance in developing countries: A comparative perspective," Departmental Working Papers 2014-26, The Australian National University, Arndt-Corden Department of Economics.
    14. Mr. Tokhir N Mirzoev & Ling Zhu, 2019. "Rethinking Fiscal Policy in Oil-Exporting Countries," IMF Working Papers 2019/108, International Monetary Fund.
    15. Xinhai Lu & Zhoumi Li & Hongzheng Wang & Yifeng Tang & Bixia Hu & Mingyue Gong & Yulong Li, 2022. "Evaluating Impact of Farmland Recessive Morphology Transition on High-Quality Agricultural Development in China," Land, MDPI, vol. 11(3), pages 1-19, March.
    16. Mr. Manuk Ghazanchyan & Ms. Janet Gale Stotsky, 2013. "Drivers of Growth: Evidence from Sub-Saharan African Countries," IMF Working Papers 2013/236, International Monetary Fund.
    17. Cantelmo, Alessandro & Melina, Giovanni & Papageorgiou, Chris, 2023. "Macroeconomic outcomes in disaster-prone countries," Journal of Development Economics, Elsevier, vol. 161(C).
    18. Hong Chen & Lanieta Rauqeuqe & Shiu Raj Singh & Yiqun Wu & Yongzheng Yang, 2019. "Pacific Island Countries: In Search of a Trade Strategy," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(12), pages 56-80, September.
    19. Levine,Paul Leslie & Melina,Giovanni & Onder,Harun & Levine,Paul Leslie & Melina,Giovanni & Onder,Harun, 2016. "Non-renewable resources, fiscal rules, and human capital," Policy Research Working Paper Series 7695, The World Bank.
    20. Simplice A. Asongu & Oasis Kodila-Tedika, 2015. "On the Empirics of Institutions and Quality of Growth: Evidence for Developing Countries," Research Africa Network Working Papers 15/041, Research Africa Network (RAN).

    More about this item

    Keywords

    Exchange rate; External reserves; Nigerian economic development; Vector Error; Correction Model (VECM);
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    Statistics

    Access and download statistics

    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:aes:jsesro:v:5:y:2016:i:1:p:56-66. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Bogdan-Vasile Ileanu (email available below). General contact details of provider: https://edirc.repec.org/data/aseeero.html .

    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.