Oil Price Shocks and their Impact on Capital Expenditure in Nigeria


  • Bright Orhewere
  • Evelyn Nwamaka Ogbeide-Osaretin


Capital expenditure; Diversification; Oil price; Volatility


Crude oil has been a major contributor to the growth of Nigeria economy, particularly as a source of revenue. However, the negative effect of its price volatility has tend to cripple the economy. Therefore, this study investigated on the outcome of the volatility of oil prices on Nigeria’s capital expenditure. Annual time series data spanning from 1970 to 2018 was used in a vector error correction model when cointergration was found among the variables. Capital expenditure was found to respond negatively to oil price volatility and government total revenue while it responded positively to domestic debt and this has highly hinder the substantial impact of capital expenditure on the growth of the country. Variations in capital expenditure was found to be largely accounted for by shocks in oil price volatility in the short run and government revenue in the long run. The study among others consequently recommend, a diversification of sources of revenue


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