Does International Oil Price Volatility Complement Domestic Food Price Instability in Nigeria? An Empirical Enquiry

Elijah Udoh, Festus O. Egwaikhide

Abstract


Of recent, there has been growing global concern over oil price fluctuation and soaring food prices. In this disquisition, we re-examine the co-movement and the causality relationship between international oil price fluctuations and domestic food price inflation in Nigeria, using data for the period 1970 to 2008. The empirical results provide clear evidence in support of a causal relationship between oil price distortions and food price instability in Nigeria. The Granger causality test show that causality runs from international oil price to domestic food price, and not vice versa. In this wise, the paper recommends that food price instability in Nigeria may be addressed by eliminating domestic and external bottlenecks which tend to undermine food supply in the country despite the abundant fertile land and conducive climatic conditions. These could be achieved through the judicious utilization of oil windfall revenue.


Full Text: PDF DOI: 10.5539/ijef.v4n1p235

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This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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