IMPACT OF INTERNATIONAL OIL PRICE ON NIGERIAN MACROECONOMIC VARIABLES FROM 1990-2017
Abstract
This study was aimed at using multiple regression technique to analyze the effect of oil price on the Nigerian macroeconomic variables from 1990 to 2017. In a bid to achieve the objectives of this study, five null and alternative hypotheses were formulated to guide the study. The statistical technique discussed in this study was used to justify the hypotheses. The diagnostic tests showed that there is no presence of multicollinearity symptoms among the explanatory variables and there is no presence of serial correlation in the residuals. The result from the diagnostic tests also showed that heteroscedasticity does not exist in the data, and the error term is normally distributed. The empirical results emanating from the analysis indicated that Nigerian macroeconomic variables (inflation rate, exchange rate, RGDP, unemployment rate, interest rate) jointly have significant effect on the oil price during the year under study. Testing if international oil price has effect on each of the Nigerian macroeconomic variables revealed that exchange rate and interest rate have significant but inverse effect on oil price, while inflation rate and RGDP have no significant effect on oil price. Again, only unemployment rate has a direct significant effect on oil price. The coefficient of determination (R2), which indicates the proportion in oil price that is explained by Nigerian macroeconomic variables turned out with a percentage of 82.9% showing that there is a strong relationship between the international oil price variable and the Nigerian macroeconomic variables. This result entails that 82.9% (percent) variation in the value of international oil price is explained by a change in the macroeconomic variables.
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