Crude Oil Price, Interest Rate and Unemployment Nexus in Nigeria: An Application of Toda and Yamamoto Long-Run Causality Procedure

This study aims to examine the relationship between crude oil price, interest rate and the uemployment rate in Nigeria using times series data for the 1991-2019 periods. The stationarity property of the series was examined using Augmented Dickey and Fuller (1979) and Elliot, Rothenberg and Stock’s (1996) unit root test. The outcomes of Augmented Dickey and Fuller indicated a mixture of an order of integration among the series while Elliot et al.’s (1996) unit root test revealed that all the series are stationary at the first difference and therefore are said to integrate of order one. The Toda and Yamamoto long-run granger causality indicated that one-way causality exists flowing from crude oil price to unemployment rate, unemployment rate to interest rate, population growth to the unemployment rate, crude oil price to interest rate and population growth to interest rate alongside two-way causality flowing from population growth to crude oil price. Therefore, based on the empirical outcomes we recommended that labour will serve as an efficient substituting factor of production for energy and capital in the case of the Nigerian economy and Nigerian government should develop both industrial and non crude oil sectors to create employment opportunities for the unemployed teeming population as well as increasing the country’s export.