Inflation, Oil Revenue and Economic Growth in Nigeria: An Ardl CoIntegration Analytical Model

Ogunjobi, J. O. and Ekiran, J. O. and Eteng, B. P Inflation, Oil Revenue and Economic Growth in Nigeria: An Ardl CoIntegration Analytical Model. Research Article, 1 (4). pp. 1-8. ISSN 3049-7159

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Abstract

This study examined the relationship between inflation, oil revenue, and economic growth in Nigeria between 1987 and 2022 is the primary goal of this study. The World Bank and the Central Bank of Nigeria provided the data used in the study’s analysis. The unit root test was utilized to determine whether the study’s variables were stationary, the ARDL Co-integration test was employed to assess long-term relationships, and the Granger causality test was employed to determine the direction of relationships between the variables. The dependent variable for the study project is the gross domestic product (GDP), and the other variables are inflation (INF), effective exchange rate (EEXR), gross capital formation (GCFC) and oil revenue (OIR). The study demonstrated the beneficial effects of oil money on economic expansion. The study further demonstrated adverse connection between economic growth and inflation. Therefore, this study recommends that the government adopt annual spending caps in order to reduce inflation. It also recommends that the government construct new refineries and refurbish existing ones in order to break the long-standing pattern of exporting crude oil at a low cost and purchasing refined oil at a high one. Because refined oil imports reduce oil earnings, rebuilding refineries is crucial. Additionally, a number of rules and guidelines should be established and closely followed to ensure that the money taken from the oil sector is handled appropriately in order to achieve the nation’s goal of economic growth.

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