Moving from Symmetric to Asymmetric Nexus between Oil Price, Exchange Rate and Government Spending in Developing Economy with Focus on Economic Sustainability

David Babatunde (), Festus Victor Bekun (), Mustafa Kerem Börü () and Rena Huseynova ()
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David Babatunde: Faculty of Business and Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus via Mersin 10, Turkey
Festus Victor Bekun: Faculty of Economics Administrative and Social sciences, Istanbul Gelisim University, Istanbul, Turkey; & University of Economics and Human Sciences in Warsaw, Poland; & Development Economics Research Center, Azerbaijan State University of Economics (UNEC), Str.6, Baku 1001, Azerbaijan
Mustafa Kerem Börü: Department of Finance, Banking and Insurance, Istanbul, Istanbul Gelisim Vocational School, Istanbul 34310, Turkey
Rena Huseynova: Department of Digital technologies and Applied Informatics, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku 1001, Azerbaijan

International Journal of Energy Economics and Policy, 2025, vol. 15, issue 3, 362-373

Abstract: Over the past few decades, many developing countries, especially Nigeria, have continuously grappled with sustaining their economies financially despite huge proceeds from the exportation of crude oil and other mineral resources. Leading to under-performance and inefficiencies in these economies. This forms the backdrop for this study, which investigates the link between the oil price, exchange rate, and government spending in Nigeria. To achieve this, the research analysed annual frequency data between 1981 and 2022 using auto-regressive distributed lag (ARDL) and Non-Linear Auto-regressive distributed lag (NARDL) models after checking for unit-root properties. Findings show that oil price (both in linear and non-linear investigations) correlated positively but cannot explain government spending. The exchange rate has a direct and significant linear and non- linear influence on government spending. Given these findings, policies on government spending should be channeled towards sustainable economic diversification to prevent future shocks in the exchange rate and oil price.

Keywords: Sustainable Economic Growth; SDG-8; Dynamic Multiplier; Oil Price; Resource Curse; Shock Evolution (search for similar items in EconPapers)
Date: 2025
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DOI: 10.32479/ijeep.19475

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