<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The effect of oil price volatility on the business cycle (measured as fluctuations in real GDP) in Nigeria is investigated, while controlling for effects of other variables such as inflation, exchange rate, money supply, trade openness and foreign direct investment. Volatility in real GDP and oil price is generated through the EGARCH process. The ARDL approach to cointegration and error correction modeling is employed for analysis of data covering the period from 1970 to 2015. The study finds positive and significant short-run effect of oil price volatility on real GDP volatility, and no significant long-run effect. The short-run and long-run effects of other variables on business cycle (real GDP volatility) in Nigeria are not statistically significant. This suggests that short-run fluctuations in real GDP are engendered mainly by oil price volatility. This could be attributed to the precarious dependence of the country on oil export. The paper recommends channeling of efforts by the government towards diversifying the productive base and exports of the country as measure to reduce volatility in the real GDP.</p></abstract>

The effect of oil price volatility on the business cycle (measured as fluctuations in real GDP) in Nigeria is investigated, while controlling for effects of other variables such as inflation, exchange rate, money supply, trade openness and foreign direct investment. Volatility in real GDP and oil price is generated through the EGARCH process. The ARDL approach to cointegration and error correction modeling is employed for analysis of data covering the period from 1970 to 2015. The study finds positive and significant short-run effect of oil price volatility on real GDP volatility, and no significant long-run effect. The short-run and long-run effects of other variables on business cycle (real GDP volatility) in Nigeria are not statistically significant. This suggests that short-run fluctuations in real GDP are engendered mainly by oil price volatility. This could be attributed to the precarious dependence of the country on oil export. The paper recommends channeling of efforts by the government towards diversifying the productive base and exports of the country as measure to reduce volatility in the real GDP.

Oil Price Volatility and Business Cycles in Nigeria

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Oil Price Volatility and Business Cycles in Nigeria"}

The effect of oil price volatility on the business cycle (measured as fluctuations in real GDP) in Nigeria is investigated, while controlling for effects of...

Oil Price Volatility and Business Cycles in Nigeria

Published Online: Sep 10, 2018

Page range: 31 - 40

DOI: https://doi.org/10.2478/sbe-2018-0018

Keywords
Oil Price Volatility, Business Cycle, EGARCH

© 2018 Aigheyisi Oziengbe Scott, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Oil Price Volatility and Business Cycles in Nigeria

Published Online: Sep 10, 2018

Page range: 31 - 40

DOI: https://doi.org/10.2478/sbe-2018-0018

KeywordsOil Price Volatility, Business Cycle, EGARCH

© 2018 Aigheyisi Oziengbe Scott, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Oil Price Volatility, Business Cycle, EGARCH