Nonlinear Effect of Oil Price Fluctuation on Economic Growth, Exchange Rate, and Inflation: Evidence from Cote d’Ivoire, Morocco and South Africa


Authors: M.T Saidu, N.A.M Naseem, U.T Babuga, Ibrahim Aliyu, and Shuaibu Ubangida
Page Range: 199-216
Published in: International Journal of Energy, Environment, and Economics, Volume 29 Issue 2
ISSN: 1054-853X

ISBN: N/A Category:

Table of Contents


The study is aimed to investigates the impact of oil price on economic growth of Cote d’ivoire, Morocco and South Africa as among major oil importing countries in Africa. We employ linear Autoregressive Distributed Lag (ARDL) and asymmetric nonlinear ARDL model of Pesaran and Smith (2001) and Shin et al. (2014), to estimate the short and long run nonlinearities by partial sum decomposition to obtains positive and negative effect of oil price between 1983Q2 and 2020Q4 where we employed a Structural break. The results suggest that the variables are cointegrated except for South Africa, showing an evidence of short run asymmetry, implying that oil price increase and decrease have different effect on economic growth. A decreasing oil price is either insignificant or has a positive effect on economic growth, Suggesting that an increase in oil price leads to a fall in economic growth. Whereas a decrease in the price of oil have a positive impact on economic growth of Cote Ivoire, while insignificant impact on Morocco. Oil price increase has a minimal positive impact in the short run in South Africa, Finally. The result indicate positive oil price fluctuation has a more considerable impact on economic growth than negative changes.

Keywords: oil price, economic growth, exchange rate, asymmetries, ARDL/NARDL