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The Impact Of Oil Shock On Nigeria Economy: Asymmetry Effect Analysis

Author

Listed:
  • AGYA ATABANI ADI

    (School of Economics, Capital University of Economics and Business, Beijing, China)

  • UDOH FRIDAY

    (Energy Economics, Policy and Management, Emerald Energy Institute, University of Port Harcourt, Nigeria)

Abstract

The paper examined impacts of oil shock on Nigerian economy using quarterly time series data spanning from 1985:1 to 2016:2. Asymmetry GARCH methods were employed. GJR-GARCH and APARCH revealed leverage effect on the economy, which influences the economy negatively due to negative oil price shock and this, exerts more impact on the economy than positive shock of the same magnitude. There was symmetry effect on agricultural sector while leverage effect on manufacturing and service sectors in APACH and EGARCH implied negative shock has more impact than positive shock. We recommends that government should save windfall revenue earn when oil price is high and invest same in sovereign wealth fund to draw from when price fall. Government should take concrete steps by committing funds to petroleum downstream sub-sector to add value and move the nation away from commodity trading to finished products. Oil companies and government should increase investment in downstream subsector while government should develop gradual and sustainable tax regime to improve its tax receipt.

Suggested Citation

  • Agya Atabani Adi & Udoh Friday, 2017. "The Impact Of Oil Shock On Nigeria Economy: Asymmetry Effect Analysis," Journal of Social and Economic Statistics, Bucharest University of Economic Studies, vol. 6(1), pages 60-74, JULY.
    • Handle: RePEc:aes:jsesro:v:6:y:2017:i:1:p:60-74
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Oil Dependency; Price shock and Nigeria Economy; Asymmetry effects and Way Forward.;
    All these keywords.

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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