Global Oil Price Volatility and Nigeria GDP: A Causality Analysis

It is common knowledge that oil is a crucial commodity in the global economy and that oil prices have persistently fluctuated since the 1970's, thus having impacts of different magnitudes on the economies of the oil exporting countries across time and space, such as Nigeria. Hence many scholars in their studies have attempted to test the direction of causality for such fluctuations in prices and its impact on Economic growth; with no consensus. This research therefore tests for the long run relationship as well as the causal relationship between global oil prices and economic growth, as well as its impact for Nigeria, employing other variables such as Inflation rate, Average exchange rate per USD, oil exports and unemployment rate, in accordance with the linear/symmetric relationship growth theory. The study was conducted via a systematic econometric methodology including Johansen Cointegration test for longrun relationships and Vector Autoregressive Models (VAR) for Granger causality tests using respective annual data from 1980 to 2015, sourced from central bank of Nigeria (CBN) and Nigeria Bureau of statistics (NBS).