The Influence of Oil Price Volatility on Selected Macroeconomic Variables in Nigeria

David Umoru, Sylvester Ohiomu and Richard Akpeke
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David Umoru: Department Of Economics, Edo University, Iyamho, Edo State, Nigeria
Sylvester Ohiomu: Department Of Economics, Edo University, Iyamho, Edo State, Nigeria
Richard Akpeke: Department Of Economics, Edo University, Iyamho, Edo State, Nigeria

Acta Universitatis Bohemiae Meridionalis, 2018, vol. 21, issue 1, 1-22

Abstract: The paper analyses the influence of oil price volatility on Exchange Rate Variability, External Reserves, Government Expenditure and real Gross Domestic Product using the methodology of Vector Auto-Regressive (VAR) to carry out regression analysis, impulse response function and factor error variance decomposition for robust policy recommendations. The results of the research show that unstable oil price exerts varying degrees of deleterious effect on exchange rate variability, external reserves, Government expenditure and real gross domestic product (GDP). Based on the findings of the study, we recommend the need for the country to branch out its revenue sources. This will further shield the dangle effect of the fluctuation in prices of oil. Serious policy attention should be attached to agricultural reformation, industrial policy drives, mines and mineral development to diversify Nigeria's economy following the downward slide in the oscillations in oil prices to address the problem of excessive dependence on crude oil exportation. This will help to achieve sustainable growth and development in Nigeria.

Keywords: Exchange Rate Variability; External Reserve; Oil Price Volatility; Real GDP; VAR (search for similar items in EconPapers)
JEL-codes: C32 E27 E71 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:boh:actaub:v:21:y:2018:i:1:p:1-22

DOI: 10.1515/acta-2018-0001

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