ABSTARCT
Nigeria is still largely dependent on crude oil to satisfy its oil needs since crude oil is animportant part of her economy. This dependency on crude oil triggers most macroeconomicindicators such as inflation to react to fluctuations in the world price of oil, making the economyvulnerable to fluctuations in the world oil price. This study therefore employs Auto RegressiveDistributive Lag analysis to examine the effects of oil price fluctuations on inflation in Nigeriausing monthly data from January 2010 to December 2017. Unlike studies conducted ondeveloped countries, this study is done for Nigeria as a developing nation.This study aimed at examining the effect of oil price fluctuations on inflation in Nigeria. Toachieve this aim, three specific objectives were examined. This study first examines the trend ofoil price fluctuations and inflation. The next objective was to examine the short run effects of oilprice fluctuations on inflation. Lastly, the third objective was to examine the long run effects ofoil price fluctuations on inflation.The result indicates a positive effect of oil price on inflation in the short run and a negative effectin the long run. This study reveals that in Nigeria as a developing country, oil price increaseresults in higher inflation directly.To reduce inflationary pressure in Nigeria, government should diversify the economy and alsofind a stable exchange rate system.
CHAPTER ONE INTRODUCTION
1.1Background of the Study
1.2Problem Statement
1.3
Research question
1.4 Objectives of the study
1.5 Hypothesis of the study
1.6 Scope of the Study
1.7 Significance of the study
1.8 Organization of the study
CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
2.2 Conceptual Review
2.1 Oil Price Fluctuations
2.2 Concept Inflation
2.3 Theoretical Review
2.3.1 AD-AS Model
2.3.2 Monetarists and Structuralist
2.4 Empirical Literature
2.5 Theoretical Framework
2.6 Summary
CHAPTER 3
RESEARCH METHODOLOGY
3.1 Introduction
3.2 Source of Data
3.4 Empirical Model Specification
3.5 Definition and Measurement of Variables
3.6 Techniques of Data Analysis
3.6.1 Stationarity Test
3.6.2 ARDL Bound Cointegration Test
3.6.3 ARDL Short-run and Long-run Estimation
3.7 Diagnostic Test
3.8 Summary
CHAPTER 4
RESULT AND DISCUSSIONS
4.1 Introduction
4.2 Descriptive Analysis
4.3 Trends of Oil Price Fluctuations and Inflation in Nigeria (2010 – 2017)
4.4 Result of Pre-Estimation Tests
4.4.1 Test for Multicolinearity Using Correlation Matrix
4.4.2 Unit Root Test
4.4.3 ARDL Bound Cointegration Test
4.5 Result of Short-run effects of Oil price Fluctuations on Inflation
4.6 Result of Long-run effect of Oil Price Fluctuations on Inflation
4.7 Result of Post-Estimation Test
4.7.1 Auto-Correlation Test
4.7.2 Stability Test
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Introduction
5.2 Summary of the study
5.3 Conclusions
5.4
Recommendations
REFERENCES