Macroeconomic Impacts of Oil Price Shocks on the Nigerian Economy

Abstract

The study investigates the macroeconomic impacts of oil price shocks in Nigeria. The study which covers a period from 1980 to 2019 made use of macroeconomic variables such as exchange rate, inflation rate, GDP while oil price is the main exogenous variable. The VAR technique of analysis is adopted and the result shows that oil price shocks do not have direct effect on the GDP but via macroeconomic variable especially exchange rate. The study indicates that exchange rate is the main intermediate variable that passes oil price shocks effect to the Nigerian economy. Evidence of Dutch Disease in Nigeria is also confirmed from the study which further shows the high level of dependency of Nigerian economy on oil.