Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries

Wasiu Afolabi Babayemi; Dahiru Abubakar; Ibrahim Haliru Wala; Yusuf Musa; Abdullahi Haliru Faruk; Samson Oladimeji Odunaiya

doi:https//dx.doi.org/10.4314/equijost.v9i1.12

Research Article
Online Published: 25 Dec 2022

Equijost. 2022; 9(1): 60-70

doi: https//dx.doi.org/10.4314/equijost.v9i1.12

Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries

Wasiu Afolabi Babayemi, Dahiru Abubakar, Ibrahim Haliru Wala, Yusuf Musa, Abdullahi Haliru Faruk, Samson Oladimeji Odunaiya.

Abstract
The discovery of oil in some African States is a mixed grill of blessing with its accompanying negative effects on the nations and their teaming population. Thus, this study investigated the impact of oil price volatility and political stability on economic growth in some selected oil-producing African countries. The study adopted the Exponential Generalized Autoregressive Conditional Heteroskedastic (EGARCH) Model of the GARCH-type family. The monthly data used were obtained from World Bank Database from January 1988 to December 2017 in three countries which include Nigeria, Libya, and Sudan. Augmented Dickey-Fuller (ADF) and Kwiatkowski-Phillip-Shin-Smidt (KPSS) tests were adopted to test the presence of unit roots in the variable series. The results from the analysis showed that a 1% increase in oil volatility tended to decrease Gross Domestic Product (GDP) in Nigeria and Sudan by 14% and 7% respectively, while the GDP of Libya tended to be positively related to the oil volatility. In addition, a 1% percent increase in oil price volatility tended to result in a 26.9% and 19.6% increase in the exchange rate of Nigeria and Libya respectively. This consequently culminated in the appreciation of their local currencies. However, in the case of Sudan, the exchange rate was negatively related to oil price volatility which implies that oil prices tended to increase the exchange rate by 1.9%. The leverage effect was negative and statistically significant throughout the countries, which means that bad news of shock was more pronounced than the good news of shock on the economic growth of the countries. The Nigerian economy had a high impact of the magnitude of the shock of about 92.14%, followed by Sudan and Libya respectively. However, Libya had the largest density of volatility of about 84.99% while Nigeria had the least density of volatility.

Key words: Key Words: Volatility, Political Stability, Leverage effect, GARCH Models, Long-run

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How to Cite this Article

Pubmed Style

Babayemi WA, Abubakar D, IHW, Musa Y, Faruk AH, Odunaiya SO. Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries. Equijost. 2022; 9(1): 60-70. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

Web Style

Babayemi WA, Abubakar D, IHW, Musa Y, Faruk AH, Odunaiya SO. Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries. https://www.equijost.com/?mno=75952 [Access: October 16, 2024]. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

AMA (American Medical Association) Style

Babayemi WA, Abubakar D, IHW, Musa Y, Faruk AH, Odunaiya SO. Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries. Equijost. 2022; 9(1): 60-70. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

Vancouver/ICMJE Style

Babayemi WA, Abubakar D, IHW, Musa Y, Faruk AH, Odunaiya SO. Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries. Equijost. (2022), [cited October 16, 2024]; 9(1): 60-70. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

Harvard Style

Babayemi, W. A., Abubakar, . D., , . I. H. W., Musa, . Y., Faruk, . A. H. & Odunaiya, . S. O. (2022) Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries. Equijost, 9 (1), 60-70. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

Turabian Style

Babayemi, Wasiu Afolabi, Dahiru Abubakar, Ibrahim Haliru Wala, Yusuf Musa, Abdullahi Haliru Faruk, and Samson Oladimeji Odunaiya. 2022. Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries. Equity Journal of Science and Technology, 9 (1), 60-70. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

Chicago Style

Babayemi, Wasiu Afolabi, Dahiru Abubakar, Ibrahim Haliru Wala, Yusuf Musa, Abdullahi Haliru Faruk, and Samson Oladimeji Odunaiya. "Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries." Equity Journal of Science and Technology 9 (2022), 60-70. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

MLA (The Modern Language Association) Style

Babayemi, Wasiu Afolabi, Dahiru Abubakar, Ibrahim Haliru Wala, Yusuf Musa, Abdullahi Haliru Faruk, and Samson Oladimeji Odunaiya. "Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries." Equity Journal of Science and Technology 9.1 (2022), 60-70. Print. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

APA (American Psychological Association) Style

Babayemi, W. A., Abubakar, . D., , . I. H. W., Musa, . Y., Faruk, . A. H. & Odunaiya, . S. O. (2022) Oil price volatility, political stability, and economic growth: empirical evidence from African oil-producing countries. Equity Journal of Science and Technology, 9 (1), 60-70. doi:https//dx.doi.org/10.4314/equijost.v9i1.12

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