Crude Oil and Economic Performance in Nigeria in the Presence of Multicollinearity Using Cobb-Douglass Model

Adesina Olumide Sunday (), Agboola O. Olaoluwa (), Adedotun Adedayo Funmi () and Adesiyan Gospel Iyanuoluwa ()
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Adesina Olumide Sunday: Johannesburg Business School, University of Johannesburg, Johannesburg 2092, South Africa
Agboola O. Olaoluwa: Department of Mathematics, Covenant University, Ota 11001, Ogun State, Nigeria
Adedotun Adedayo Funmi: Department of Mathematics, Covenant University, Ota 11001, Ogun State, Nigeria
Adesiyan Gospel Iyanuoluwa: Department of Mathematics and Statistics, Redeemer's University, Ede 232101, Osun State, Nigeria

International Journal of Energy Economics and Policy, 2025, vol. 15, issue 2, 666-679

Abstract: Nigeria's major source of revenue, energy and foreign exchange is crude oil for over three decades. There is need to identify business activities surrounding crude oil that impact the real gross domestic product of Nigeria. This research project models the impact of crude oil on Nigeria economic growth using non-linear econometric model, namely, Cobb-Douglas production function. Crude oil data was obtained from National Bureau of Statistics covering 1981-2021, exploratory data analysis on Nigeria's crude oil data and diagnostic tests as multicollinearity and autocorrelation tests were carried out on the data then the data was fitted to Cobb-Douglas production function model. The results showed that real gross domestic product has a positive relationship with crude oil revenue and crude oil consumption. Based on the findings of this project work, it is recommended that the government should implement policies and take steps to preserve and manage the oil sector effectively.

Keywords: Crude Oil; Cobb-Douglas; Real Gross Domestic Product; Nigeria (search for similar items in EconPapers)
Date: 2025
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DOI: 10.32479/ijeep.17535

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