Oil Price Shocks, Fuel Subsidies and Macroeconomic (In)stability in Nigeria

Omotosho, Babatunde S.

doi:10.33429/cjas.10219.1/6

Cited by 24 publications

(28 citation statements)

References 37 publications

(50 reference statements)

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“…Furthermore, the Buhari administration has been accused of poor intelligence gathering on the part of the law enforcement agency. This is attributed to the fact that the herdsmen-killers do return to communities where they had killed people and destroyed properties, yet nothing happens to them and they go with brute confidence even issuing threats to farmers who have reported their evil activities to the authorities (Omotosho, 2019). In the face of all these realities, the keen observers put forward a question what are the strategies deployed by the Buhari administration to contain the herders-farmers conflict and its impact on the economy of Nigeria.…”

Section: Buhari's Administration and The Herders-farmers Conflict In ...mentioning

confidence: 99%

Herders–Farmers Conflict and the Nigerian Economy 2015–2020

Ohajionu

2022

Acta Politica Polonica

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This paper examines strategies implemented by the President Muhammadu Buhari's administration in order to resolve frequent clashes between herders and farmers, bearing in mind the economic implications of this violent conflict for the economy of Nigeria. The paper adopted the Human Needs Theory as its framework of analysis. The data were sourced from academic journals, internet materials, newspapers, and textbooks. The herders-farmers conflict pre-dated the Muhammadu Buhari presidency but in terms of scale and intensity of killings and wanton destruction of properties, it gained momentum during his administration. The non-verbal language of the Presidency's description of the conflict situation at the time Nigerians needed a strong comment became worrisome to the affected victims who concluded the pro-herder's sympathy stance of the President. Not until the Presidency began to take bold actions by introducing the grazing bill allowing a cattle colony of about 5,000 hectares in the states of the Federation, deployment of military personnel to the concerned states and holding stakeholders meeting across the states, Nigerians decided to unanimously join their forces with the government to tackle the herders-farmers impasse headlong. The conflict situation is no better even in the face of strategic policies implemented, however, the nation-state is trying to minimize the negative effects of the imbroglio on the agricultural sector of the country which is a huge resource to Nigeria's Gross Domestic Product (GDP).

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Section: Buhari's Administration and The Herders-farmers Conflict In ...mentioning

confidence: 99%

Herders–Farmers Conflict and the Nigerian Economy 2015–2020

Ohajionu

2022

Acta Politica Polonica

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“…Utilizing a New-Keynesian DSGE model to examine the macroeconomic implications of oil price shocks and the fuel subsidy regime in Nigeria, Omotosho (2019) discovered that oil price shocks impacted on headline inflation, though, the contribution was minimal owing to incomplete pass-through of international oil prices to domestic fuel price. The study revealed 85-113 that a negative oil price shock generated lower marginal cost and culminated in a fall in domestic inflation.…”

Section: -113mentioning

confidence: 99%

“…Similarly, the relationship between oil price declines and inflation is captured by β 6 , and is expected to also be positive, implying that decline in oil prices leads to lower marginal cost of production and a fall in inflation. However, falling oil prices weaken the foreign exchange earnings of oil exporting countries which are import dependent, manifesting in the depreciation of the domestic currency and resulting in rising import prices and increase in domestic inflation (See Bala & Chin, 2018;Omotosho, 2019). Consequently, β 6 can be negative in Nigeria.…”

Section: Model Specificationmentioning

confidence: 99%

Asymmetric Impact of Oil Price on Inflation in Nigeria

Bawa¹,

Abdullahi²,

Tukur³

et al. 2021

CBN-JAS

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This study examines the impact of oil price shocks on inflation in Nigeria. A NonLinear Autoregressive Distributed Lag (NARDL) approach was applied on quarterly data spanning 1999Q1 to 2018Q4. Results showed that oil price increases led to increase in headline, core and food measures of inflation in Nigeria. However, a decline in oil price resulted in a decline in the marginal cost of production and culminated in moderation of domestic inflation. Furthermore, negative oil price shocks led to higher inflation in Nigeria when exchange rate is dropped from the models, indicating that exchange rate absorbed the impact of oil price declines earlier, as lower oil prices culminated in lower external reserve, depreciation of the naira and ultimately higher inflationary pressures. Also, core inflation tends to respond more to oil price increases than food inflation. These results were robust to changes in econometric specifications and sample period. The study recommends that monetary policy actions of the Central Bank of Nigeria should focus on taming core inflation in periods of substantial oil price increases while strengthening its efforts at ensuring domestic sustainability in food production through its agricultural intervention programmes to further minimize the impact of international oil prices on food inflation. Similarly, the fiscal authorities should ensure that the fiscal stance is not excessively procyclical in periods of rising oil prices.

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“…Their results suggest that inflation in Nigeria is a monetary phenomenon, price stickiness is observed, and monetary policy reacts to exchange rate movement; while foreign inflation, external debt and exchange rate shocks are shown to drive output in Nigeria. More recently, Omotosho (2019) in an estimated new Keynesian DSGE model which features oil price passthrough and fuel subsidies, reports that a negative oil price shock reduces aggregate output, catalyses non-oil output, increases inflation and depreciates the exchange rate. The paper further shows that the severity of output contraction sequel to a negative oil price shock is amplified in a model with fuel subsidies but advise caution on the removal of fuel subsidies due to observed amplification of macroeconomic volatilities, resulting therefrom.…”

Section: Introductionmentioning

confidence: 99%

Oil Price Shocks and Macroeconomic Dynamics in an Oil-Exporting Emerging Economy: A New Keynesian DSGE Approach

Oladunni¹

2020

CBN-JAS

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The global oil dynamics has significant implications for both oil exporting and importing small open economies. However, much of the literature on oil shocks is oriented towards advanced oil-importing economies. Micro-founded studies that explore the effects of oil shocks from the standpoint of oil-endowed emerging economies are rather sparse, compared to the preponderance of studies on developed oil importers and exporters. Thus, resulting to a consequential knowledge gap on oil price transmission mechanism and a limited appreciation of the growing policy dilemmas in these economies. The paper, therefore, sets up a new Keynesian dynamic stochastic general equilibrium (DSGE) model to study how an oil price shock impacts on macroeconomic aggregates in an oil-rich emerging economy. We consider a positive oil price shock to uncover the extent to which oil price increase is positive for the economy. The typical small open economy model is enriched with an export-oriented oil firm, a multi-sector foreign production and a non-oil domestic firm. The model is closed with exchange rate-augmented interest rate rule, and it is calibrated for Nigeria, an important oil producer. Macroeconomic responses, sequel to a simulated positive oil price shock, reveal evidence of Dutch disease and the operation of the Harrod-Balassa-Samuelson effect. We find a compelling need for oil-endowed emerging economies to address these phenomena by ensuring a robust non-oil sector with limited exposure to the vagaries of oil price oscillation.

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Oil Price Shocks, Fuel Subsidies and Macroeconomic (In)stability in Nigeria

Cited by 24 publications

References 37 publications

Herders–Farmers Conflict and the Nigerian Economy 2015–2020

Herders–Farmers Conflict and the Nigerian Economy 2015–2020

Asymmetric Impact of Oil Price on Inflation in Nigeria

Oil Price Shocks and Macroeconomic Dynamics in an Oil-Exporting Emerging Economy: A New Keynesian DSGE Approach

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