Oil Price Volatility and Federal Government Recurrent Expenditure in Nigeria: Mediating Role of Exchange Rate

Authors

  • Ojukwu, Chioma O., Ph.D University of Port Harcourt, Choba, Rivers State
  • Udokang, Nsisong Boniface University of Port Harcourt, Choba, Rivers State

DOI:

https://doi.org/10.57233/gijmss.v6i3.11

Keywords:

Oil Price Volatility, Brent Oil Price, Federal Government Recurrent Expenditure, GARCH

Abstract

An empirical examination of the impact of oil price volatility on federal government recurrent expenditure in Nigeria and the mediating role of exchange rate from 1980 to 2022 was carried out in this study. The Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model was used in the data analysis. The findings reveal compelling evidence that oil price volatility as measured using the Brent oil volatility has a significant effect on recurrent federal government spending patterns. The analysis also shows that exchange rate variations serve as significant control variable that influence oil price fluctuations and federal government recurrent expenditure. Hence, the study recommends that federal government should create and properly administer a stabilization fund to save excess oil revenue during periods of boom to lessen the immediate effects of oil price volatility and the abrupt impact on budgetary allocations on recurrent expenditure. There is also the need to have a deep-cut on unproductive recurrent expenditures by federal government and its appointees. The study further recommends the adoption of a closely monitored exchange rate policy by government.

Author Biographies

Ojukwu, Chioma O., Ph.D , University of Port Harcourt, Choba, Rivers State

Department of Accounting, University of Port Harcourt, Choba, Rivers State

Udokang, Nsisong Boniface, University of Port Harcourt, Choba, Rivers State

Department of Finance and Banking, University of Port Harcourt, Choba, Rivers State

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Published

2023-10-23

How to Cite

Ojukwu, C. O., & Udokang, N. B. (2023). Oil Price Volatility and Federal Government Recurrent Expenditure in Nigeria: Mediating Role of Exchange Rate. Gusau International Journal of Management and Social Sciences, 6(3), 201–218. https://doi.org/10.57233/gijmss.v6i3.11