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Asymmetric Effects of Expected Oil Wealth on the Demand for Money in Nigeria

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  • Anthony Enisan Akinlo

Abstract

The paper investigates the asymmetric effects of expected oil wealth on the demand for money in Nigeria over the period 1986:Q1–2020:Q4, by using linear autoregressive distributed lag (ARDL) and nonlinear ARDL (NARDL) approaches. The linear (ARDL) bounds testing approach shows that expected oil wealth has no significant effect both in the short and long run. However, when a NARDL model is applied, the effect of negative and positive expected oil wealth shocks on the demand for money is significant and unequal in the long run, with a higher long-term impact of negative shocks compared to positive shocks. This result highlights a long-run asymmetry in the transmission of expected oil wealth shocks. Expected oil wealth is thus rather a long-run phenomenon for the Nigerian money demand function.

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  • Anthony Enisan Akinlo, 2024. "Asymmetric Effects of Expected Oil Wealth on the Demand for Money in Nigeria," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 16(1), pages 105-119, June.
    • Handle: RePEc:rfb:journl:v:16:y:2024:i:1:p:105-119
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