(Translated by https://www.hiragana.jp/)
The Asymmetric Impact of Oil Price and Electricity Consumption on Economic Growth: Evidence from Nigeria
IDEAS home Printed from https://ideas.repec.org/a/vrs/auseab/v9y2021i1p50-70n9.html
   My bibliography  Save this article

The Asymmetric Impact of Oil Price and Electricity Consumption on Economic Growth: Evidence from Nigeria

Author

Listed:
  • Longe Adedayo Emmanuel

    (Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan, Nigeria)

  • Adekoya Taiwo Matthew

    (Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan, Nigeria)

  • Soyemi Caleb Olugbenga

    (Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria)

  • Agbanuji David Adeiza

    (Energy Economics, Management and Policy, Emerald Energy Institute, Uniport)

  • Adekomi Idowu Jacob

    (Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria)

Abstract

The study examines the asymmetric impact of oil price and electricity consumption on economic growth in Nigeria between 1981 and 2018 using the Non-Linear Autoregressive Distributed Lag (NARDL) model. Results reveal that falling and increasing oil prices as well as gross capital formation affect economic growth in Nigeria negatively and significantly in the short-run, while electricity consumption affects economic growth positively and significantly in the short-run. In the long-run, the impact on economic growth of negative changes in oil price is negative and insignificant, while positive changes in oil price have a positive but insignificant impact on economic growth. The impact on the economic growth of electricity consumption remains positive but insignificant while that of gross capital formation is positive and significant. The results suggest that both in the short and the long run positive changes in oil price have greater impact on the economic growth than negative oil price changes. Capital formation is a significant determinant of Nigerian economic growth both in the short and the long run.

Suggested Citation

  • Longe Adedayo Emmanuel & Adekoya Taiwo Matthew & Soyemi Caleb Olugbenga & Agbanuji David Adeiza & Adekomi Idowu Jacob, 2021. "The Asymmetric Impact of Oil Price and Electricity Consumption on Economic Growth: Evidence from Nigeria," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 9(1), pages 50-70, September.
    • Handle: RePEc:vrs:auseab:v:9:y:2021:i:1:p:50-70:n:9
    DOI: 10.2478/auseb-2021-0003
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/auseb-2021-0003
    Download Restriction: no
    File URL: https://libkey.io/10.2478/auseb-2021-0003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Muhammad M. Yakubu & Benedict N. Akanegbu, 2019. "Oil price volatility and economic growth in Nigeria," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 9(6), pages 1-1.
    2. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    3. Rasheed Oyaromade & Adagunodo Mathew & Bamidele P. Abalaba, 2014. "Energy Consumption and Economic Growth in Nigeria: A Causality Analysis," International Journal of Sustainable Energy and Environmental Research, Conscientia Beam, vol. 3(1), pages 53-61.
    4. Shahbaz, Muhammad & Lean, Hooi Hooi, 2012. "Does financial development increase energy consumption? The role of industrialization and urbanization in Tunisia," Energy Policy, Elsevier, vol. 40(C), pages 473-479.
    5. Shahbaz, Muhammad & Tang, Chor Foon & Shahbaz Shabbir, Muhammad, 2011. "Electricity consumption and economic growth nexus in Portugal using cointegration and causality approaches," Energy Policy, Elsevier, vol. 39(6), pages 3529-3536, June.
    6. Belke, Ansgar & Dobnik, Frauke & Dreger, Christian, 2011. "Energy consumption and economic growth: New insights into the cointegration relationship," Energy Economics, Elsevier, vol. 33(5), pages 782-789, September.
    7. Thoma, Mark, 2004. "Electrical energy usage over the business cycle," Energy Economics, Elsevier, vol. 26(3), pages 463-485, May.
    8. John Baffes & M. Ayhan Kose & Franziska Ohnsorge & Marc Stocker, 2015. "The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses," Policy Research Notes (PRNs) 94725, The World Bank.
    9. Mehrara, Mohsen, 2008. "The asymmetric relationship between oil revenues and economic activities: The case of oil-exporting countries," Energy Policy, Elsevier, vol. 36(3), pages 1164-1168, March.
    10. Sarwar, Suleman & Chen, Wei & Waheed, Rida, 2017. "Electricity consumption, oil price and economic growth: Global perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 9-18.
    11. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    12. Shahbaz, Muhammad & Hye, Qazi Muhammad Adnan & Tiwari, Aviral Kumar & Leitão, Nuno Carlos, 2013. "Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 109-121.
    13. Jayaraman, T.K. & Choong, Chee-Keong, 2009. "Growth and oil price: A study of causal relationships in small Pacific Island countries," Energy Policy, Elsevier, vol. 37(6), pages 2182-2189, June.
    14. Esen, Ömer & Bayrak, Metin, 2017. "Does More Energy Consumption Support Economic Growth in Net Energy-Importing Countries?," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 22(42), pages 75-98.
    15. Oluwatosin Adeniyi & Abimbola Oyinlola & Olusegun Omisakin, 2011. "Oil price shocks and economic growth in Nigeria: are thresholds important?," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 35(4), pages 308-333, December.
    16. Molem Chirstopher Sama & Ndifor Roger Tah, 2016. "The Effect of Energy Consumption on Economic Growth in Cameroon," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(9), pages 510-521, September.
    17. Costantini, Valeria & Martini, Chiara, 2010. "The causality between energy consumption and economic growth: A multi-sectoral analysis using non-stationary cointegrated panel data," Energy Economics, Elsevier, vol. 32(3), pages 591-603, May.
    18. AfDB AfDB, . "African Development Report 1998," African Development Report, African Development Bank, number 2309, August.
    19. Lardic, Sandrine & Mignon, Valerie, 2006. "The impact of oil prices on GDP in European countries: An empirical investigation based on asymmetric cointegration," Energy Policy, Elsevier, vol. 34(18), pages 3910-3915, December.
    20. Muhammad SHAHBAZ & Smile DUBE, 2012. "Revisiting the Relationship between Coal Consumption and Economic Growth: Cointegration and Causality Analysis in Pakistan," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(1).
    21. AfDB AfDB, . "African Development Report 1998," African Development Report, African Development Bank, number 2231, August.
    22. Fatai, K & Oxley, Les & Scrimgeour, F.G, 2004. "Modelling the causal relationship between energy consumption and GDP in New Zealand, Australia, India, Indonesia, The Philippines and Thailand," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 64(3), pages 431-445.
    23. Farzanegan, Mohammad Reza & Markwardt, Gunther, 2009. "The effects of oil price shocks on the Iranian economy," Energy Economics, Elsevier, vol. 31(1), pages 134-151, January.
    24. Rasheed Oyaromade & Adagunodo Mathew & Bamidele P Abalaba, 2014. "Energy Consumption and Economic Growth in Nigeria: A Causality Analysis," International Journal of Sustainable Energy and Environmental Research, Conscientia Beam, vol. 3(1), pages 53-61.
    25. Timilsina, Govinda R., 2015. "Oil prices and the global economy: A general equilibrium analysis," Energy Economics, Elsevier, vol. 49(C), pages 669-675.
    26. Jafari, Yaghoob & Othman, Jamal & Nor, Abu Hassan Shaari Mohd, 2012. "Energy consumption, economic growth and environmental pollutants in Indonesia," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 879-889.
    27. Dogan, Eyup, 2015. "The relationship between economic growth and electricity consumption from renewable and non-renewable sources: A study of Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 534-546.
    28. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    29. Shahbaz, Muhammad & Sarwar, Suleman & Chen, Wei & Malik, Muhammad Nasir, 2017. "Dynamics of electricity consumption, oil price and economic growth: Global perspective," Energy Policy, Elsevier, vol. 108(C), pages 256-270.
    30. Squalli, Jay, 2007. "Electricity consumption and economic growth: Bounds and causality analyses of OPEC members," Energy Economics, Elsevier, vol. 29(6), pages 1192-1205, November.
    31. Akinlo, A.E., 2009. "Electricity consumption and economic growth in Nigeria: Evidence from cointegration and co-feature analysis," Journal of Policy Modeling, Elsevier, vol. 31(5), pages 681-693, September.
    32. Shahbaz, Muhammad & Kumar Tiwari, Aviral & Nasir, Muhammad, 2013. "The effects of financial development, economic growth, coal consumption and trade openness on CO2 emissions in South Africa," Energy Policy, Elsevier, vol. 61(C), pages 1452-1459.
    33. Iwayemi, Akin & Fowowe, Babajide, 2011. "Impact of oil price shocks on selected macroeconomic variables in Nigeria," Energy Policy, Elsevier, vol. 39(2), pages 603-612, February.
    34. Molem Chirstopher Sama & Ndifor Roger Tah, 2016. "The Effect of Energy Consumption on Economic Growth in Cameroon," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(9), pages 510-521.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shahbaz, Muhammad & Sarwar, Suleman & Chen, Wei & Malik, Muhammad Nasir, 2017. "Dynamics of electricity consumption, oil price and economic growth: Global perspective," Energy Policy, Elsevier, vol. 108(C), pages 256-270.
    2. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    3. Shahbaz, Muhammad & Benkraiem, Ramzi & Miloudi, Anthony & Lahiani, Amine, 2017. "Production function with electricity consumption and policy implications in Portugal," Energy Policy, Elsevier, vol. 110(C), pages 588-599.
    4. Acheampong, Alex O. & Boateng, Elliot & Amponsah, Mary & Dzator, Janet, 2021. "Revisiting the economic growth–energy consumption nexus: Does globalization matter?," Energy Economics, Elsevier, vol. 102(C).
    5. Solomon P. Nathaniel & Festus V. Bekun, 2020. "Electricity Consumption, Urbanization and Economic Growth in Nigeria: New Insights from Combined Cointegration amidst Structural Breaks," Research Africa Network Working Papers 20/013, Research Africa Network (RAN).
    6. Sofien, Tiba & Omri, Anis, 2016. "Literature survey on the relationships between energy variables, environment and economic growth," MPRA Paper 82555, University Library of Munich, Germany, revised 14 Sep 2016.
    7. Shahbaz, Muhammad, 2017. "Current Issues in Time-Series Analysis for the Energy-Growth Nexus; Asymmetries and Nonlinearities Case Study: Pakistan," MPRA Paper 82221, University Library of Munich, Germany, revised 19 Oct 2017.
    8. Shahbaz, Muhammad & Zakaria, Muhammad & Shahzad, Syed Jawad Hussain & Mahalik, Mantu Kumar, 2018. "The energy consumption and economic growth nexus in top ten energy-consuming countries: Fresh evidence from using the quantile-on-quantile approach," Energy Economics, Elsevier, vol. 71(C), pages 282-301.
    9. Dakpogan, Arnaud & Smit, Eon, 2018. "The effect of electricity losses on GDP in Benin," MPRA Paper 89545, University Library of Munich, Germany.
    10. Malik, Meheroon Nisa Abdul & Masih, Mansur, 2017. "The relationship between energy consumption, financial development and economic growth: an evidence from Malaysia based on ARDL," MPRA Paper 86374, University Library of Munich, Germany.
    11. Saleheen, Khan & Farooq Ahmed, Jam & Muhammad, Shahbaz, 2012. "Electricity Consumption and Economic Growth in Kazakhstan: Fresh Evidence from a Multivariate Framework Analysis," MPRA Paper 43460, University Library of Munich, Germany, revised 20 Dec 2012.
    12. Behmiri, Niaz Bashiri & Pires Manso, José Ramos, 2014. "The linkage between crude oil consumption and economic growth in Latin America: The panel framework investigations for multiple regions," Energy, Elsevier, vol. 72(C), pages 233-241.
    13. Aydin, Mucahit, 2019. "Renewable and non-renewable electricity consumption–economic growth nexus: Evidence from OECD countries," Renewable Energy, Elsevier, vol. 136(C), pages 599-606.
    14. Suleman Sarwar & Rida Waheed & Mehnoor Amir & Muqaddas Khalid, 2018. "Role of Energy on Economy The Case of Micro to Macro Level Analysis," Economics Bulletin, AccessEcon, vol. 38(4), pages 1905-1926.
    15. Chen, Ping-Yu & Chen, Sheng-Tung & Chen, Chi-Chung, 2012. "Energy consumption and economic growth—New evidence from meta analysis," Energy Policy, Elsevier, vol. 44(C), pages 245-255.
    16. Kyophilavong, Phouphet & Shahbaz, Muhammad & Kim, Byoungki & OH, Jeong-Soo, 2017. "A note on the electricity-growth nexus in Lao PDR," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 1251-1260.
    17. Troster, Victor & Shahbaz, Muhammad & Uddin, Gazi Salah, 2018. "Renewable energy, oil prices, and economic activity: A Granger-causality in quantiles analysis," Energy Economics, Elsevier, vol. 70(C), pages 440-452.
    18. Bashiri Behmiri, Niaz & Pires Manso, José R., 2013. "How crude oil consumption impacts on economic growth of Sub-Saharan Africa?," Energy, Elsevier, vol. 54(C), pages 74-83.
    19. Wu, Cheng-Feng & Wang, Chien-Ming & Chang, Tsangyao & Yuan, Chien-Chung, 2019. "The nexus of electricity and economic growth in major economies: The United States-India-China triangle," Energy, Elsevier, vol. 188(C).
    20. Patterson C. Ekeocha & Dinci J. Penzin & Jonathan Emenike Ogbuabor, 2020. "Energy Consumption and Economic Growth in Nigeria: A Test of Alternative Specifications," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 369-379.

    More about this item

    Keywords

    oil price; electricity consumption; economic growth; NARDL;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:auseab:v:9:y:2021:i:1:p:50-70:n:9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.