International Journal of Development and Economic Sustainability (IJDES)

EA Journals

impulse response function

Effect of Oil Price Shocks on Selected Macroeconomic Variables in Nigeria (1990-2021) (Published)

This study investigates the impact of oil price shocks on selected macroeconomic variables in Nigeria from 1990-2021. The research employs ex-post facto methodology and econometric analysis, focusing on variables such as oil price, unemployment, balance of payment, exchange rate, and real gross domestic product (GDP). Utilising the annual Vector Autoregressive (VAR) model, the study explores the relationships among these variables, assuming them to be endogenous. Time series data from the Central Bank of Nigeria’s statistical bulletin is collected for the analysis. The result of the unit root test indicate that all the variables are integrated of order one (I (1)), necessitating further investigation into their relationships. Impulse response function revealed the dynamic responses of macroeconomic variables to oil price shocks over a ten-year period. Granger causality test highlight causal relationship among the variables, emphasizing the influence of oil price shocks on unemployment, balance of payment, and real GDP. The findings suggest that oil price shocks significantly affect the selected macroeconomic variables, with implications for exchange rates, unemployment rates, and balance of payments. The study recommends policy measures to insulate the economy from international oil price shocks, such as diversification, encouraging local production, and creating a favourable environment for foreign direct investment. Additionally, the government is advised to formulate and implement fiscal and monetary policies strategically to stabilise the economy amidst oil price fluctuations, thereby promoting sustainable economic growth.

Keywords: Central Bank of Nigeria (CBN), Foreign Direct Investment (FDI), Oil Price Shocks, Vector Autoregressive (VAR), impulse response function

Capital Market Predictive Power on the Development of the Nigerian Economy: An Impulse Response and Variance Decomposition Approach (Published)

The study is an empirical investigation of the contributions of the Nigeria’s capital market to the development of Nigerian economy. Most researchers focused on capital market and growth nexus, where as we deviated by focusing on the role played by capital market in ensuring reduction of unemployment and poverty in Nigeria. Specifically, we investigated the contributions of market capitalization (MCAP), value of share traded (VST) and all share index (ASI) to unemployment rate (UNPR) and poverty (NPI) reductions in Nigeria within the period 1981 to 2017. The data series used were sourced from the annual statistical bulletin of the central bank of Nigeria (CBN) and Nigeria stock exchange (NSE). Preliminary analyses of stationarity and cointegration tests revealed that the series were non stationary at levels; and cointegrated respectively. The result of the impulse response functions (IRF) and variance decompositions from the two models considered revealed that the contributions of the capital market to poverty reduction in Nigeria is highly insignificant, while it contributes fairly to unemployment reductions in Nigeria within the study period. Conclusively, the research reveals that the Nigeria capital market is not contributing optimally to the development of Nigeria’s economy as this is evident on its abysmal contributions to poverty and unemployment reductions. In line with the findings of this work, we recommend that the Nigeria capital market should be repositioned in a way that it can optimally contribute to the reduction of unemployment and poverty in Nigeria. 


Keywords: Capital market, Sustainable Development, Variance Decomposition, impulse response function

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