OIL PRICE SHOCKS AND MACROECONOMIC VOLATILITY IN NIGERIA

ABSTRACT

On account of Nigeria’s dependence on oil sector, the stability of oil price become a crucial economic policy to be actualized given its connection to the average Nigerian economy. The primary objectives of this study are to analyze the impact of oil price shocks and macroeconomic volatility in Nigeria ranging from 1970-2010, and to give policy recommendations based on the findings of the study.

In the course of the research, the hypotheses tested were Ho: oil price has no significant impact on inflation in Nigeria. Ho: oil price has no significant impact on unemployment in Nigeria. The methodology adopted for the investigation is the liner regression applying the conventional ordinary least squares (OLS) technique. The findings of the research shows that oil price has a positive relationship with inflation rates in Nigeria while oil price has a negative relationships with unemployment in Nigeria which conforms to economic and apriori expectation. It is the recommendation of this paper that productivity should be enhanced to absorb the excess money in circulation and to build a structure that will stabilize the fluctuations on Nigeria economy caused by international oil price shocks.          

DEPARTMENT OF ECONOMICS

FACULTY OF SOCIAL SCIENCES

A PROJECT WORK SUBMITTED TO THE DEPARTMENT OF ECONOMICS, FACULTY OF SOCIAL SCIENCES

TABLE OF CONTENTS

Title Page                                                      

Approved Page                                            

Dedication                                                    

Acknowledgment                                                    

CHAPTER ONE                                         

Introduction                                                

1.1       Background of the Study               

1.2       Statement of the Study                   

1.3       Objective of the Study                               

1.4       Hypothesis of the Study                             

1.5       Significance of the Study                           

1.6       Scope and Limitations of the Study         

CHAPTER TWO                                        

Review of Related Literature                    

2.1       Theoretical Literature                                

2.1.1   Theoretical Issues based on the topic      

2.1.2   Monetary Theory of inflation       

2.1.3   Keynes Theory of demand pull’ inflation                       

2.1.4   Theory of cost-push inflation                   

2.1.5   Theory of sectoral inflation          

2.1.6   Structural theory of inflation        

2.1.7   Theory of Mark –up inflation       

2.1.8   Theory of Unemployment             

2.1.9   Theory of frictional Unemployment

2..1.10 Theory of seasonal Unemployment        

2.1.11 Theory of cyclical Unemployment          

2.1.12 Theory of structural Unemployment       

2.1.13 Theory of Technological Unemployment

2.2       Empirical Literature           

2.3       Limitations of Previous Study      

CHAPTER THREE                                   

3.0       Research Design and Methodology

3.1       Methodology                       

3.2       Method of Evaluation                    

3.4       Data Requirement and Sources     

CHAPTER FOUR 

4.0       Presentation and Analysis of Results      

4.1       Empirical Result                  

4.2       Examination of Algebraic sing of the parameter estimate

4.3       Statistical Test of Significance for T-test            

4.4       Evaluation of the working Hypothesis base on statistical

Criteria