Estimation of Oil Price Fluctuations, Energy Consumption, and Economic Growth in Nigeria Using VAR Model


Author: Nuhu Musa
Page Range: 175-186
Published in: International Journal of Energy, Environment, and Economics, Volume 30 Issue 2
ISSN: 1054-853X

Table of Contents


This paper aims at examining the link between fluctuations of crude oil prices, energy consumption and Nigeria’s economic growth using a set of data from 1986 to 2021. The study employs unrestricted vector auto-regression (VAR) and GARCH Models. Variables considered include crude oil price, energy consumption index, oil revenue (oilr), consumer price index(cpi), exchange rate(exr), and real GDP. Results of GARCH indicate that oil price shocks negatively affected GDP. Results of the VAR approach indicate oil price shock negatively affected growth, but the impact of energy consumption is positive. Paper recommends that government should make concerted efforts to diversify the revenue base by investing in other related productive sectors like agriculture and manufacturing to cushion the effect of unexpected fluctuations arising from international oil prices.

Keywords: crude oil price, oil price fluctuations, energy consumption, VAR

JEL Codes: E17, E32, Q40

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