Does Oil Consumption Respond Asymmetrically to Oil Price, Exchange Rate and Income Differentials?

Emmanuel Uche (), Veronica Adaku Ihezukwu (), Folusho Olufunke Chinyere Osunkwo and Chijioke Okoronkwo ()
Additional contact information
Emmanuel Uche: Department of Economics Abia State University P.M.B 2000, Uturu, NIGERIA.
Veronica Adaku Ihezukwu: Department of Economics Abia State University P.M.B 2000, Uturu, NIGERIA.
Folusho Olufunke Chinyere Osunkwo: Department of Economics Abia State University P.M.B 2000, Uturu, NIGERIA.
Chijioke Okoronkwo: Central Bank of Nigeria Plot 33, Abubakar Tafawa Balewa Way Central Business District P.M.B. 0187, Garki Abuja, NIGERIA

Jurnal Ekonomi Malaysia, 2021, vol. 55, issue 2, 51-63

Abstract: This study empirically evaluates the dynamic effects oil price, income and exchange rate on oil consumption in Algeria, Angola, Nigeria, South Africa, and Tunisia. Specifically, it tries to reveal the differential effects of rising and falling oil prices, economic prosperities and adversaries, as well as, exchange rate appreciations and depreciation on oil consumption in the selected countries. The current study relied on monthly data sourced from OPEC and IMFIFS data banks and analyzed within the Nonlinear ARDL framework. The NARDL model traces asymmetry in macroeconomic relationships by isolating the effects of positive changes from negative changes. The empirical findings reveal that the effects of oil price deviations on oil consumption is asymmetric in the short-run in Angola and Tunisia, and in the long-run in Nigeria. Furthermore, income and exchange rate deviations affect oil consumption asymmetrically in Algeria, Nigeria, South Africa and Tunisia. However, exchange rate deviation does not have an asymmetric effect on oil consumption in Algeria. The overall implication of such asymmetric effects is that positive deviations could not offset negative deviations and vice-versa. Therefore, to guide against general welfare losses, policymakers should take cognizance of such nonlinear and asymmetric effects in their policy moderations.

Keywords: Energy demand; asymmetry; exchange rate; income differentials; nonlinear ARDL; oil prices (search for similar items in EconPapers)
JEL-codes: Q4 Q41 Q42 Q43 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.ukm.my/jem/wp-content/uploads/2021/10/jeko_552-5.pdf (application/pdf)

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:ukm:jlekon:v:55:y:2021:i:2:p:51-63

DOI: 10.17576/JEM-2021-5502-5

Access Statistics for this article

More articles in Jurnal Ekonomi Malaysia from Faculty of Economics and Business, Universiti Kebangsaan Malaysia Contact information at EDIRC.
Bibliographic data for series maintained by Muhammad Asri Abd Ghani ().