THE IMPACT OF OIL SHOCK ON NIGERIA ECONOMY: ASYMMETRY EFFECT ANALYSIS

Agya Adi () and Udoh Friday
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Udoh Friday: Energy Economics, Policy and Management, Emerald Energy Institute, University of Port Harcourt, Nigeria

Journal of Social and Economic Statistics, 2017, vol. 6, issue 1, 60-74

Abstract: The paper examined impacts of oil shock on Nigerian economy using quarterly time series data spanning from 1985:1 to 2016:2. Asymmetry GARCH methods were employed. GJR-GARCH and APARCH revealed leverage effect on the economy, which influences the economy negatively due to negative oil price shock and this, exerts more impact on the economy than positive shock of the same magnitude. There was symmetry effect on agricultural sector while leverage effect on manufacturing and service sectors in APACH and EGARCH implied negative shock has more impact than positive shock. We recommends that government should save windfall revenue earn when oil price is high and invest same in sovereign wealth fund to draw from when price fall. Government should take concrete steps by committing funds to petroleum downstream sub-sector to add value and move the nation away from commodity trading to finished products. Oil companies and government should increase investment in downstream subsector while government should develop gradual and sustainable tax regime to improve its tax receipt.

Keywords: Oil Dependency; Price shock and Nigeria Economy; Asymmetry effects and Way Forward. (search for similar items in EconPapers)
JEL-codes: Q Q4 Q43 (search for similar items in EconPapers)
Date: 2017
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