Crude Oil Exploration-External Reserves Nexus in Nigeria
Abstract
This study empirically investigates the relationship between Nigeria’s crude oil and the external reserves. It examined the dynamic causal interactions among key macroeconomic indicators in Nigeria using a Vector Error Correction Model framework using the dataset from 1982 to 2022. The study found that external reserves are significantly shaped by trade openness and inflation, while reserves themselves exert influence on inflation and crude oil activities. Crude oil remains a central pivot in the Nigerian economy, both affecting and being affected by variables such as Gross Domestic Product , Foreign Direct Investment , and trade openness. FDI emerged as a major catalyst for growth, significantly influencing crude oil, GDP, and trade. Meanwhile, GDP stands out as a growth engine, shaping trade openness, inflation, and oil activity. Trade openness, while responsive to macroeconomic shifts, also significantly contributes to reserve accumulation and price movements. Inflation interacts with almost all variables, serving as both a cause and effect of economic shifts.
Keywords
Foreign Direct InvestmentGross Domestic ProductVector Error Correction ModelCrude Oil. Words: 158
References
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