Oil Price Volatility, Monetary Policy and Economic Growth in Some Selected Africa Countries

Olayinka Bobola Awopetu

doi:10.7176/jesd/12-12-09

Abstract

This research work assessed the relationship among oil Price Volatility, Monetary Policy and Economic growth in oil exporting Africa Countries somewhere in the range of 1990 and 2018. Specifically, the investigation looked into the impacts of macroeconomic factors on economic growth and broke down the interrelationships among monetary approach transmission instruments, Oil value stuns and yield development of oil exporting Africa Countries. Information for the investigation was sourced from World Development Indicators distributed by the World Bank, IMF online Database and Central Banks of chosen nations. The investigation employed Westerlund Error Correction Based Panel Cointegration test and Structural Vector Autoregressive (SVAR) as estimation methods. The unit root test resultshowed that the factors of intrigue were coordinated of a similar request that is I(1). Results from SVAR Impulse Response Functions demonstrated that the reaction of yield development to stuns radiating from both financial approach factors and unrefined petroleum cost was sure and huge all through the examination time frame. The outcomes further indicated that expansionary money related strategy that animates a reduction in household loan fee was more viable in expanding the yield development than contractionary monetary formation that motivates an increment local financing cost. It was discovered from the investigation that oil price volatility increase was just prone to modestly affect economic growth while oil price reduction has a huge negative impact on economic growth. This shows that the fall in oil price volatility have deteriorating impact on conversion scale, while oil price increment was seen as unessential to swapping scale development in oil exporting Africa Countries. In light of these discoveries, the analysis in this manner infers that there is deviated relationship among oil price volatility, monetary policy and economic growth in oil exporting Africa Countries. Keywords: Monetary policy, Oil price and Economic growth DOI: 10.7176/JESD/12-12-09 Publication date: June 30 th 2021

Highlights

Oil price stabilization takes advantage of an important role in economic growth across developed and developing Countries, irrespective of the importance of the economy as a net-importer or net-exporter
This implies that all the variables are integrated of order one, 1(1)
The economic implication of stationary variables is that any disturbance or shock will not be sustained for a long period of time, that is, volatility to the variables will vanish over time

Summary

Introduction

Oil price stabilization takes advantage of an important role in economic growth across developed and developing Countries, irrespective of the importance of the economy as a net-importer or net-exporter. (2014) laid emphasy on a different dimension of this importance across different Countries by showing that synergy with monetary policy of the developing Country is required for an effective oil pricing policy for the developing category. This came as a result of the continuous economic declines being experienced in the developing world aftermath of the 1973 oil shock. Production of petroleum and other liquids averaged 244,000 barrels per day in 2016, which is lower than its peak production of 375,000 barrels per day in 2005 This situation is the same for almost all other African Oil Producing Countries. In Algeria for instance, their oil sector contributes about 46.4 percent to the GDP in 2015 and forms 97percent of the total export earnings

Results

Discussion

Conclusion