Title:
OIL PRICE SHOCKS AND FISCAL POLICY MANAGEMENT: IMPLICATIONS FOR NIGERIAN ECONOMIC PLANNING (1981-2019)

Authors:
Akinboyo Olorunyomi Lawrence, Nigeria

Abstract:

Since the end of the second World War till the recent time, fluctuations in high oil prices have been a reoccurring decimal, with increased intensity. Oil price fluctuations has remained the major source of disturbances for the economies of oil producing and importing countries like Nigeria. This could partly be attributed to oil proceeds accounting for over 90 per cent of Nigeria revenue. Hence, fluctuations in oil prices has policy implications for both economic and fiscal management. Therefore, this study is fundamentally motivated to examine effects of the oil price shocks on fiscal expenditure in Nigeria. Leveraging on the structural vector autoregressive (SVAR) model, the major contribution of this study to the body of knowledge on impact of oil price shocks on fiscal policy management is the examination of the impacts of oil price volatilities on Government Expenditure (GEXP), Money Supply (MS2), Gross Domestic Product (GDP) and Government Revenue (GREV). The outcomes indicate that oil prices have momentous impact on fical policy in Nigeria within the study horizon. Furthermore, the finding divulges that the impacts of oil price shock were first felt by Government Revenue and Gross Domestic Product before impacting on Government Expenditure.  Hence, for policy purposes, the study opines that the economy should be diversified with a view to curtail the effects of external shocks on Nigeria’s economy.