Oil Price Shocks, Exchange Rate Volatility, and Private Consumption in Nigeria

Emmanuel Olayemi Awoleye, Felix Adeniyi Fashanu and Eneadaba Ocheme
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Emmanuel Olayemi Awoleye: Department of Economics, College of Humanities, Social and Management Sciences, McPherson University, Seriki-Sotayo, Ogun State, Nigeria
Felix Adeniyi Fashanu: Department of Economics, College of Humanities, Social and Management Sciences, McPherson University, Seriki-Sotayo, Ogun State, Nigeria
Eneadaba Ocheme: Department of Economics, College of Humanities, Social and Management Sciences, McPherson University, Seriki-Sotayo, Ogun State, Nigeria

Ilorin Journal of Economic Policy, 2026, vol. 13, issue 2, 56-77

Abstract: This research analyses the effects of oil price shocks and exchange rate volatility on private consumption in Nigeria from the year 1986 to 2024. The analysis of the effects uses the Nonlinear Autoregressive Distributed Lag (NARDL) approach, while the evaluation of the exchange rate volatility series is done using the standard deviation approach. From the results obtained both positive and negative oil price shocks affect private consumption in Nigeria negatively. Furthermore, the variation of the exchange rate negatively affects private consumption in the country, while the the growth rate of Gross Domestic Product and the inflation rate have a positive effect on private consumption. It is clear from the results that both positive and negative oil price shocks and volatility of the exchange rate affect private consumption behaviour in the country significantly. Consequently, this paper suggests macroeconomic policies to stabilise the economy against oil price shocks and to maintain a stable exchange rate

Keywords: Oil price shocks; Exchange rate volatility; Private consumption; Nonlinear ARDL (search for similar items in EconPapers)
JEL-codes: E21 F31 Q41 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ilojep:023870

DOI: 10.4314/ijep.v13

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