Ogundipe, Oluwatomisin M., Paul Ojeaga, and Adeyemi Adefioye Ogundipe. "Oil Price and Exchange Rate Volatility in Nigeria." Journal of Economics and Finance (IOSR) 5.4 (2014): 01-09.
Abstract
Oil as the mainstay of the Nigerian economy, accounts for over 95 percent of its foreign earnings
and about 83 percent of its budgetary allocation, to this end, changes in oil prices has implications for the
Nigerian economy and, in particular, exchange rate movements. The latter is mostly important due to the double
dilemma of being an oil exporting and oil-importing country, a situation that emerged in the last decade. The
study examined the effects of oil price, external reserves and interest rate on exchange rate volatility in Nigeria
using annual data covering the period 1970 to 2011. The long run relationship among the variables was
determined using the Johansen Co-integration technique while the vector correction mechanism was used to
examine the speed of adjustment of the variables from the short run dynamics to the long run equilibrium. It was
observed that a proportionate change in oil price leads to a more than proportionate change in exchange rate
volatility in Nigeria; which implies that exchange rate is susceptible to changes in oil price. The study therefore
recommend that the Nigeria government should diversify from the oil sector to other sectors of the economy
hereby dwindling the impact of crude oil as the mainstay of the economy and overcome the effect of incessant
changes in crude oil prices which often culminate into macroeconomic instability.
Keywords: Oil Price, Exchange rate volatility, Johansen Co-integration, Vector Error Correction Model
沒有留言:
張貼留言