IMPACT OF OIL PRICE SHOCKS ON SELECTED MACROECONOMIC VARIABLES IN FROM 1970-2016
Abstract
This study examines the impact of oil price shock on some selected macroeconomic variables in Nigeria within the period 1970 to 2016. Using annual data and employing the SVAR methodology, the study finds that oil price shock has significant effect on exchange rate, inflation rate and GDP both in the short and long run. The diagnostics teste on the estimated result suggests that the estimated robust and consistent with both economic theory and empirical evidence and there is no diagnostic problem. The study therefore, recommends that policy should be formulated by the Nigerian government against the happenings in the international oil market and design counteracting policies to cushion the effects that might emanate from the oil shocks. Also, Nigeria should diversify its economy from oil base to non-oil base.
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