An Autoregressive Distributed Lag (ARDL) Approach to the Oil Consumption and Growth Nexus: Nigerian evidence

Abstract

This study attempts to examine the relationship between oil consumption, carbon emission and economic growth in Nigeria covering the period 1980-2011. The study applied Dickey-Fuller Generalised Least Square (DF-GLS) unit root test and autoregressive distributed lag (ARDL) bound test approach to co-integration. The bond test results reveals a long-run equilibrium relationship among oil consumption, carbon emission and economic growth. The result also showed a positive and statistically significant impact of oil consumption on economic growth. The coefficient of error correction term in the ARDL model was statistically significant, indicating that the adjustment process by which long-run equilibrium is restored after a shock is very fast. In conclusion, oil consumption played an important role in the economic growth of Nigeria, thus efforts to conserve oil will have negative repercussions on economic growth.