US oil supply shocks and economies of oil-exporting African countries: A GVAR-Oil Resource Analysis

Chisom Umechukwu and David Olayungbo

Resources Policy, 2022, vol. 75, issue C

Abstract: This study examined the effects of US Shale-oil supply which started in 2013. The study employed GVAR-Oil resource model from the first quarter of 1980 to the fourth quarter of 2018 for 36 trading countries with special focus on 4 oil-exporting African countries. Given that shale supply is a recent phenomenon, we estimated two models to capture these effects. The first model spanned from 1980 to 2013, while the second model was from 1980 to 2018. After implementing the preliminary tests of optimal lag length selection, cointegration test and the weak exogeneity test, we conducted the persistence profile to find Egypt and Gabon adjust to US oil supply shocks faster than Algeria while Nigeria did not. The result of the generalized impulse response functions showed negative effects of the US shale oil supply in Egypt, positive effects in Nigeria and Gabon but insignificant in Algeria. The generalized forecast variance error decomposition function conducted found output of China, Japan, US, Europe, Asia and Latin America respectively to contribute the largest variations in oil supplies during the study period. African countries, on the other hand, were found to contribute in small proportion. We recommended that robust oil savings funds by oil-exporting African countries can act as buffers against oil supply shocks.

Keywords: US Shale oil; Output; Weak exogeneity; GVAR-Oil model; African oil exporting countries (search for similar items in EconPapers)
JEL-codes: C32 E31 F42 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:75:y:2022:i:c:s0301420721004888

DOI: 10.1016/j.resourpol.2021.102480

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