IMPACT OF OIL PRICE VOLATILITY AND INFLATION ON ECONOMIC GROWTH IN NIGERIA
Sunday Ernest and Koginam, Owudumopu Alex
Volume 12 Issue 1
Abstract
This study examines the impact of oil price volatility and inflation on economic growth in Nigeria from 1980-2023. The study employed the Autoregressive Distributed Lag model in the estimation of the specified regression model. The outcome of the bound test revealed evidence of cointegration between oil price volatility, inflation and economic growth. The findings also show that oil price volatility has significant impact on economic growth in the long run period. The findings indicate that a unit increase in the price volatility of oil is associated with 11.83% decline in the growth of the national output. However, the impact of oil price volatility on economic growth is positive in the short run. Moreover, the study found that exchange rate fluctuations and the rise in the price level depressed economic growth in the long run. The study concludes that volatility in the oil price and inflation are important determinants of economic growth in Nigeria and stressed on the imperative of diversifying the economy to reduce the dependence on crude oil proceeds and weaken the impact of oil price volatility on the growth of national output. Moreover, the study advocates the promotion of local content in oil refining and production, as it would reduce and stabilize the cost of production of domestic industries and mitigate inflationary pressures in the economy. Keywords: Oil Price Volatility, Economic Growth, Inflation, ARDL, Brent Price
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