Revenue Dampening Effect of the Oil–Dollar Inverse Relationship for Sub-Saharan African Economies

Pat Obi, Ebenezer Bugri Anarfo and Greg Obi

Journal of African Business, 2019, vol. 20, issue 3, 305-316

Abstract: We investigate the revenue impact of the inverse relations between oil price and the US dollar exchange rates for the following Sub-Saharan African countries: Angola, Ghana, Kenya, Nigeria, and South Africa. These countries were chosen either because of their reliance on oil exports or due to their economic dominance in the region. Existence of a negative relationship suggests that falling oil prices result in two interrelated outcomes: lower oil export revenues in US dollar terms and greater (lower) purchasing power of the dollar (domestic currency). For the oil exporters in our sample, we find evidence of revenue dampening in that reduced dollar receipts during periods of falling oil prices were dampened by higher revenues after conversion to the local currency. Also, we find evidence of both short-run and long-run reverse causality between oil price and exchange rate. But this is only for the currencies of the key oil exporters. On that basis, we recommend a policy shift that emphasizes domestic resource utilization as the basis for exploiting the benefits of the oil–dollar inverse relationship.

Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/15228916.2019.1580997 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:wjabxx:v:20:y:2019:i:3:p:305-316

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/wjab20

DOI: 10.1080/15228916.2019.1580997

Access Statistics for this article

Journal of African Business is currently edited by Samuel Bonsu

More articles in Journal of African Business from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().