Monetary Transmission Mechanism, Oil Price Shocks and Economic Growth of Nigeria
Keywords:Oil price; Monetary Transmission Mechanism; Economic Growth
The paper investigates the relationship between monetary transmission mechanism, oil price shock and Nigeria economic growth from 1980 to 2018. Data were collected on major variables such as oil price, balance of payment, interest rate, exchange rate, inflation rate and GDP growth rate. Structural Vector Auto-Regression SVAR technique was applied and the results show that oil price shocks affect the channels in the MTM differently. While some channels in the MTM are significantly responsive to oil price shocks, some are not. The effect of oil price shocks on domestic price level in the economy is not direct. The exchange rate shocks have the highest influence on the domestic price level in Nigeria despite the fact that inflation rate does not respond significantly to oil price shocks but it does to exchange rate shocks and the economy responds significantly to inflation shocks. This sequence of reactions underscores the importance of both exchange rate and price channels in transmitting the shocks from oil price to the domestic economy.
Akinleye, S. O., & Ekpo, S. (2013). Oil price shocks and macroeconomic performance in Nigeria. Economía Mexicana Nueva Época, volumen Cierre de época, número II de 2013, pp 565-624.
Aliyu, S. U. R. (2009). Impact of oil price shock and exchange rate volatility on economic growth in Nigeria: An empirical investigation.
Berg, A. G., & Ostry, J. D. (2017). Inequality and unsustainable growth: Two sides of the same coin? IMF Economic Review, 65(4), 792-815.
Cheng, M. K. C. (2006). A VAR analysis of Kenya's monetary policy transmission mechanism: how does the central bank's REPO rate affect the economy? : International Monetary Fund.
Den Haan, W. J., Sumner, S. W., & Yamashiro, G. M. (2011). Bank loan components and the time‐varying effects of monetary policy shocks. Economica, 78(312), 593-617.
Elbourne, A., & de Haan, J. (2009). Modeling monetary policy transmission in acceding countries: Vector autoregression versus structural vector autoregression. Emerging Markets Finance and Trade, 45(2), 4-20.
Gul, H., Mughal, K., & Rahim, S. (2012). Linkage between monetary instruments and economic growth. Universal Journal of Management and Social Sciences, 2(5), 69-76.
Mishkin, F. S. (2007). Monetary policy strategy: Mit press.
Mogaji, P. K. (2015). Policy Rule-based Stress Tests of Monetary Integration and Single Monetary Policy in the West African Monetary Zone.
Omojolaibi, J. A. (2014). Crude oil price dynamics and transmission mechanism of the macroeconomic indicators in N igeria. OPEC Energy Review, 38(3), 341-355.
Omolade, A., & Ngalawa, H. (2016). Monetary policy transmission mechanism and growth of the manufacturing sectors in Libya and Nigeria. Journal of Entrepreneurship, Business and Economics, 5(1), 67-107.
Omolade, A., Nwosa, P., & Ngalawa, H. (2019). Monetary Transmission Channel, Oil Price Shock and the Manufacturing Sector in Nigeria. Folia Oeconomica Stetinensia, 19(1), 89-113.
Onyeiwu, C. (2012). Monetary policy and economic growth of Nigeria. Journal of Economics and Sustainable Development, 3(7), 62-70.
Roemer, M. (2015). 11 DUTCH DISEASE IN DEVELOPING COUNTRIES: SWALLOWING BITTER MEDICINE. Paper presented at the The Primary Sector in Economic Development (Routledge Revivals): Proceedings of the Seventh Arne Ryde Symposium, Frostavallen, August 29-30 1983.
Romer, P. M. (1994). The origins of endogenous growth. Journal of Economic perspectives, 8(1), 3-22.
Stock, J. H., & Watson, M. W. (2001). Vector autoregressions. Journal of Economic perspectives, 15(4), 101-115.
How to Cite
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.