EFFECT OF OIL PRICE FLUCTUATIONS ON THE PRICE OF SELECTED AGRICULTURAL COMMODITIES IN NIGERIA (JANUARY 2000 – DECEMBER 2015)

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This study was conducted to examine the effect of oil price fluctuations on the price of selected agricultural commodities in Nigeria using time series data sourced from Central Bank website, United States Energy Information Administration (E.I.A) website and Food and Agricultural Organization Statistics (FAOSTAT) between January 2000 and December 2015. The variables employed include oil price, exchange rate, the price of agricultural commodities (rice, wheat, soybean, palm oil). The Non-Linear Autoregressive Distributed Lag Model (NARDL) was employed in the analysis of the data using Eviews 9.0.

The result of the data analysis revealed that increase and decrease in oil price have a positive and significant relationship with the price of all the agricultural commodities in the short run, while in the long run, increase and decrease in oil price have a positive but insignificant relationship with the price of all the agricultural commodities.

This study therefore conclude that oil price have a short run positive effect on the price of the selected agricultural commodities. Thus, it is recommended, based on the findings of this study that the government should formulate agricultural policies that will insulate the economy in the short run against any global food crisis that may result from oil price change.

TABLE OF CONTENTS

TITLEi

CERTIFICATIONii

DEDICATIONiii

ACKNOWLEDEMENTiv

TABLE OF CONTENTv

LIST OF TABLESix

LIST OF FIGURESx

ABSTRACTxi

CHAPTER ONE: INTRODUCTION1

1.1 Background of the study1

1.2 Statement of the Problem3

1.3 Objective of the study7

1.4 Research Hypothesis7

1.5 Justification for the study8

1.6 Scope of the study8

1.7 Plan of the study8

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CHAPTER TWO: LITERATURE REVIEW10

2.0 Introduction10

2.1 Theoretical Review10

2.1.1 Theory of Real Business Cycle11

2.1.2 Neutrality Hypothesis11

2.1.3 Conservation Hypothesis12

2.1.4 Growth Hypothesis12

2.1.5 Feedback Hypothesis112

2.2 Methodological Review13

2.3 Empirical Review 16

CHAPTER THREE: THEORETICAL FRAMEWORK AND METHODOLOGY19

3.0 Introduction119

3.1 Theoretical Framework 19

3.2 Methodology19

3.2.1 Study Area20

3.2.2 Data and Measurement of Variables23

3.3 Estimation Procedures24

3.3.1 Preliminary analysis24

3.3.1.1 Descriptive Statistics24

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3.3.1.2 Graphical analysis25

3.3.1.3 Formal pre-test25

3.3.1.4 Unit root test26

3.3.1.5 Co-integration Test26

3.3.2 Estimation Technique26

3.3.3 Post Estimation27

3.3.3.1 Normality Test27

3.3.3.2 Heteroscedasticity Test27

3.3.3.3 Serial correlation Test28

3.3.3.4 Linearity Test28

CHAPTER FOUR: PRESENTATION AND DISCUSSION OF RESULT29

4.0 Introduction29

4.1 Preliminary Analysis29

4.1.1 Descriptive statistics29

4.1.2 Graphical Analysis31

4.1.3 Unit root Test33

4.1.4 Co-integration Test35

4.2 Model Estimation Result38

4.2.1 Empirical Analysis38

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4.2.2 Wald Test43

4.3 Post Estimation 50

4.3.1 Normality Test50

4.3.2 Test for Serial correlation50

4.3.3 Test for Heteroscedasticity50

4.3.4 Linearity Test50

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION52

5.1 Summary of Major Findings52

5.2 Conclusion of the Study53

5.3 Recommendation of the Study54

5.4 Suggestion for Further Studies55

REFERENCES56

APPENDIX60

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EFFECT OF OIL PRICE FLUCTUATIONS ON THE PRICE OF SELECTED AGRICULTURAL COMMODITIES IN NIGERIA (JANUARY 2000 – DECEMBER 2015)

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