The Effects of Fluctuating Oil Prices on Selected Macroeconomic Variables: TheCase of Nigeria, 1972-2020
Young Nwoye, Emmanuel Anoruo, Uchenna Akpom, Kanfitine Lare-Lantone

Abstract
In this study, we analyze the dynamic relationship or the impact of fluctuating oil prices on some selected macroeconomic variables in Nigeria from 1972–2020 using Vector Autoregressive (VAR) models. The macroeconomic variables examined are Oil Price (OP), Gross Domestic Product (GDP), Consumer price index (CPI), Official Exchange Rate (OER) and Money Supply (M1). The pertinent use of this model can remove impulse response anomalies or puzzle such as price puzzles and or exchange rate puzzles commonly found in studies that apply VARs model in medium open economic countries such as Nigeria. Estimation results indicate that random fluctuation in oil prices significantly affects the domestic economy. The impulse response results indicate that random monetary shocks caused by fluctuating oil prices responded quite differently at the start of the period but returned to the balance line in the long run.

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