ASYMMETRIC EFFECT OF OIL SHOCKS ON FOOD PRICES IN NIGERIA: A NON LINEAR AUTOREGRESSIVE DISTRIBUTED LAGS ANALYSIS

Abdulaziz Shehu,Nasiru Alhaji Yau,Shafii Sayuti Abdullah

doi:10.32479/ijeep.7319

Abdulaziz Shehu, Nasiru Alhaji Yau + Show 1 more

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https://doi.org/10.32479/ijeep.7319

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Abstract

This paper examines the asymmetric effect of oil shocks on food prices in Nigeria, using quarterly time series data for the period of January 2010 to December, 2017. Non Linear Autoregressive distributive lag framework was used to analyse both the asymmetric short run and long run effect of oil shocks on food prices. The results indicate that positive oil price shocks have a positive and significant effect on food price while negative changes have no significant effect on food prices. Thus, the paper suggests the need for the government to strengthen its effort in the development of agricultural sector as well as diversifying its sources of income. There is also need for an institution that is mandated to save and invest the excess liquidity that arises from positive oil shocks in the development of agricultural sector and other sectors of the economy.

Highlights

Oil sector has been one of the vital sectors in the global economy
The results revealed that monetary policy rate has a positive and significant effect on food prices
The paper empirically examined the asymmetric effect of oil price shocks on food prices in Nigeria from the first quota of 2010 to the last quota of 2017 using non Linear Auto regressive distributive lag model

Summary

INTRODUCTION

Oil sector has been one of the vital sectors in the global economy. The sector served as a source of input and energy to almost all other sectors of the economy. Others (Ibrahim, 2015; Abdulaziz et al, 2016; Olasunkanmi and Oladele, 2018) found that the relationship is asymmetric, implying that the effect of oil price decrease on food prices significantly differs from that of oil price increase. The few studies on the effect of oil price shocks on food prices in Nigeria (Nwako et al, 2016; Olasunkanmi and Oladele, 2018) focused on prices of only 5 agricultural products. The relevance of this paper to policy formulation in an oil-producing economy like Nigeria cannot be over emphasised as it would help the policy makers and monetary authorities to anticipate the likely effects of oil price fluctuations on food prices in the country. Section four discusses the empirical results, while section five gives the conclusion and policy implications

LITERATURE REVIEW

DATA AND METHODOLOGY

RESULTS AND DISCUSSION

Conclusion

CONCLUSION