TO GET THE COMPLETE JOURNAL/THESIS FOR TOPIC BELOW,
CALL: 08168759420, 08068231953
WHATSAPP: 08137701720
EFFECT OF OIL PRICE FLUCTUATION AND VOLATILITY ON THE ECONOMY OF NIGERIA: EVIDENCE FROM SVAR AND GARCH MODELS
ABSTRACT
This study examines the effect of oil price fluctuation and volatility on the economy of Nigeria using data covering 1980 – 2019, and collected from the database of World Bank Development Indicators (WDI) and international financial statistics (IFS). The variables on which data were collected are oil prices (OILP), inflation (INFL), exchange rate (EXCR) and real gross domestic product (RGDP). The data were analyzed using the structural vector auto-regressive (SVAR) model and the generalized autoregressive conditional heteroscedasticity (GARCH) model.Findings from the study show that RGDP in Nigeria increases as oil prices increase. The implication is that the economic growth of the Nigeria is driven by external forces, since crude oil prices are determine by exogenous factors. Based on the findings, the study recommends the need for the diversification of the Nigeria’s revenue sources to make the economy less oil dependent. Furthermore, the degree of sensitivity of the Nigerian economy to changes in oil prices underscores the need for buffers to be built during the era of rising oil prices. Therefore, the idea of excess of crude account introduced in 2004 should be revisited, rebuilt and maintained when prices of crude improves.
Keywords: oil price fluctuation, SVAR, GARCH