Fiscal Policy Responses to Oil Price Shocks and Economic Growth in African Oil-Producing Countries

Taofeek Ajani Lamidi

doi:10.56201/ijebm.vol.12.no8.2026.pg289.307

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Fiscal Policy Responses to Oil Price Shocks and Economic Growth in African Oil-Producing Countries

Taofeek Ajani Lamidi

Abstract

This study examined the effects of fiscal policy responses to oil price shocks on economic growth in African oil-producing countries, using Nigeria as the case study. Specifically, the study investigated the effects of government expenditure responses and public debt management on economic growth in Nigeria. An ex post facto research design was adopted, while annual time- series data covering the period 1990–2025 were obtained from the Central Bank of Nigeria, National Bureau of Statistics, Debt Management Office, International Monetary Fund, World Bank, Organization of Petroleum Exporting Countries, and the U.S. Energy Information Administration. The study employed the Nonlinear Autoregressive Distributed Lag model to estimate both the short-run and long-run relationships among the variables. Unit root tests confirmed that the variables were integrated of mixed orders, while the ARDL Bounds Test established the existence of a long-run equilibrium relationship. Results indicated that government expenditure responses to oil price shocks exerted a positive and statistically significant effect on economic growth, whereas public debt management exhibited a statistically significant negative effect on economic growth. The error correction mechanism suggested a relatively rapid adjustment toward long-run equilibrium following short-run shocks. The study concluded that effective fiscal policy responses are essential for mitigating the adverse effects of oil price volatility on economic growth. It recommended improving the efficiency of government expenditure, strengthening public debt management, diversifying government revenue sources, enhancing fiscal stabilization mechanisms, and promoting greater fiscal transparency and institutional reforms. These measures are expected to improve macroeconomic resilience and support sustainable economic growth in Nigeria and provide useful policy lessons for other African oil-producing countries.

Keywords

Fiscal PolicyOil Price ShocksGovernment ExpenditurePublic Debt ManagementEconomic GrowthNigeriaAfrican Oil-Producing CountriesNARDL

References

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Fiscal Policy Responses to Oil Price Shocks and Economic Growth in African Oil-Producing Countries

Abstract

Keywords

References

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