Economic Recessions in Nigeria: An Econometric Investigation of Roles of Crude oil Price Volatility (1970 -2016)

B.A. Adeniyi, S.A. Datul, O.Z. Amat and A.B. Omotoso

No 288312, 2017 Annual NAAE Conference, October 16-19, Abeokuta, Nigeria from Nigerian Association of Agricultural Economists

Abstract: This paper analysed the relationship between crude oil price volatility and Nigerian• Gross Domestic Products (proxy for growth of Nigerian economy) for the period 1970 to 2016 with Gareh (1, I) model and Vector autoregressive (VAR) model. The result of Arch test confirmed that crude oil price is significantly volatile while analysis of the result of trend of crude oil price volatility from 1970 to 2016 revealed that the 1973-74, 1979-80, 2003-2007, 2010-2014 boom periods were associated with crude oil price increases while the oil price collapse of 1986-2000 and near recession indices of year 2015-2016 is an episode of crude oil price fall.The resultofVARestimation revealed that there is a statistically significant, direct relationship between crude oil price volatility (COP) and gross domestic product (GDP} in the short run. Also, impulse response function showed that shock in crude oil prices has both positive and negative effect on gross domestic product in the short~ depending on whether the shock from crude oil price is an increase or a decrease (positive or negative) which might implied period of economic recession or prosperity. The paper therefore recommended that governments at all levels should intensify their efforts in diversifying the economy to a more productive and less volatile sector like agriculture in order to improve agricultural products export instead of total and heavy reliance on rents from crude oil export whose price is highly volatile and to insulate the economy against these shocks (decrease in oil prices) and its attendant consequences.

Keywords: Demand and Price Analysis; Public Economics; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 7
Date: 2017-10
New Economics Papers: this item is included in nep-bec and nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:ags:naae17:288312

DOI: 10.22004/ag.econ.288312

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