Asymmetric oil price shocks and the economies of selected oil-exporting African countries: a global VAR approach

The study investigated the effect of oil price shocks on the economies of four selected oil-exporting African countries from the period of the first quarter of 1980 to the fourth quarter of 2018 using a global vector autoregression. After carrying out all the preliminary tests such as the unit root, cointegration, weak exogeneity, persistence profile and the stability test, we found asymmetric effects of oil price shocks on output to be significant in Algeria and Egypt while symmetric effects are found in Gabon and Nigeria. The study discovered that oil price shocks are higher and persist in Algeria and Egypt while the effects of the shocks are lower in Gabon and Nigeria. Thus, this study concluded that effects of positive oil price matter for Algeria and Egypt while effects of both positive and negative oil price do not matter in Gabon and Nigeria’s economies. This study recommends that Algeria and Egypt should always maximize oil revenue during the period of oil price increase to offset economic severity during the period of oil price decrease.