The nexus of oil consumption, oil price volatility and economic growth in Ghana
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Date
2017-01-25
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Abstract
The study investigated the nexus of oil consumption, oil price volatility and economic growth in Ghana. Annual time series data sourced from the World Bank’s Development Indicator (WDI) were used in this study, and the series spanned from 1980 to 2013. The ADF test proved all the variables to be stationary after first differencing. The Johansen cointegration test indicated two cointegration equations among the series. The study found a statistically significant positive relationship between crude oil consumption and Ghana’s economic growth, both in the long and in the short run. Crude oil price was found to have a negative relationship with Ghana’s economic growth in the short run, but a positive relationship with Ghana’s economic growth in the long run.
The study further found a negative significant relationship between oil price volatility and Ghana’s economic growth in the long run.
The study recommends an efficient consumption of crude oil especially in the productive sectors (Manufacturing, Agricultural and Transport sectors) of the economy, in order to stimulate Ghana’s economic growth. And also, to reduce Ghana’s vulnerability to oil price volatility, policy makers must adopt risk management instruments such as physical reserves and hedging against oil prices.
Description
A thesis submitted to the Department of Economics,
Kwame Nkrumah University of Science and Technology, in partial fulfillment of the requirements for the Award of Master of Science Degree in Economics (Energy and Natural Resource), 2016