Oil price volatility and fiscal sustainability in Nigeria (1971-2013).
| dc.contributor.author | Alagbon, Oluwagbenga Peter | |
| dc.date.accessioned | 2020-02-06T09:18:17Z | |
| dc.date.available | 2020-02-06T09:18:17Z | |
| dc.date.issued | 2016 | |
| dc.description | xiv,102P | en_US |
| dc.description.abstract | The study examined the relationship between the oil price volatility and fiscal sustainability in Nigeria using multicointegration single-equation test procedure. The study specifically investigates the tendency for strong fiscal sustainability in Nigeria from 1971 - 2013; establishes the implication of oil price volatility for fiscal sustainability in the country during the period; and determines the direction of causality between oil price volatility and fiscal imbalance in Nigeria. Secondary data were used for the study. Annual data on government expenditure, government revenue, debt, and oil price volatility were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin and Organisation of Petroleum Exporting Countries (OPEC) Report, 2014 edition. Data collected were analysed using descriptive analysis (graphs and tables) and econometric technique such as Generalised Autoregressive Conditional Heteroscedasticity (GARCH), Multicointegration single-equation procedure and VECM Granger Causality technique. The test for fiscal sustainability was analyzed under three different deterministic component models (Model 1: without trend, Model 2: with linear trends, and Model 3: with both linear and quadratic trends). The results showed that fiscal process was sustainable in Model 1 and Model 2 as the coefficient that represent the relation between the flow variables (first level cointegration) and the coefficient that represent the relation between the flow and stock variables (second level cointegration) fulfil sustainability criterion. In Model 1, (β = 0.943927 < 1, p < 0.05 and γ = -0.4408879 < 0, p < 0.05). Also, in Model 2, (β = 0.897160 < 1, p < 0.05 and γ = -0.371569, p < 0.05). In both cases, as there was majority of surpluses, revenues fall in order to accommodate the increasing level of wealth. Nevertheless, in Model 3, (β = 0.963851 < 1 and γ = 0.003398 > 0), the result negates the criterion for fiscal sustainability as the coefficient that represents the second level cointegration (γ) is greater than zero. However, when the effect of oil price volatility was included and investigated for fiscal sustainability, the findings revealed the evident of fiscal sustainability in all the three models as the coefficient that represent the relation between the flow variables and between the flow and stock variables fulfil sustainability criterion. In Model 1, (β = 0.905 < 1, p < 0.05 and γ = -0.106 < 0). Also, in Model 2, (β = 0.882 < 1, p < 0.05 and γ = -0.098). Moreover, in Model 3, (β = 0.965< 1, p < 0.05 and γ = -0.005). In both cases, there is negative relationship between revenues and savings. In addition, result showed a unidirectional strong Granger causality running from debt, government expenditure and government revenue to oil price volatility, and from government expenditure to debt. However, given the focus of this study, we concluded that there is no evidence of bidirectional Granger causality among the variables both in short-run and long-run and strong causality. The study concluded that oil price volatility had a positive effect on fiscal sustainability in Nigeria. | en_US |
| dc.identifier.citation | Alagbon,O.P (2016). Oil price volatility and fiscal sustainability in Nigeria (1971-2013). Obafemi Awolowo University | en_US |
| dc.identifier.uri | https://ir.oauife.edu.ng/handle/123456789/5145 | |
| dc.language.iso | en | en_US |
| dc.publisher | Economics, Obafemi Awolowo University | en_US |
| dc.subject | Oil price | en_US |
| dc.subject | Fiscal sustainability | en_US |
| dc.subject | Volatility | en_US |
| dc.subject | Government expenditure | en_US |
| dc.subject | Price volatility | en_US |
| dc.title | Oil price volatility and fiscal sustainability in Nigeria (1971-2013). | en_US |
| dc.type | Thesis | en_US |