Crude Oil Price Shocks, Monetary Policy and Output Growth in African Oil Producing Countries
Crude Oil Price Shocks, Monetary Policy and Output Growth in African Oil Producing Countries

Summary/Abstract: This study examined the interrelationships among monetary policy transmission mechanism, oil price shocks and output growthin the selected African oil producing countries. Data for the study were sourced from World Development Indicators published by the World Bank and International Monetary Fund (World Economic Outlook). The study employed Structural Vector Autoregressive (SVAR) as estimation techniques. Findings from the SVAR Impulse Response Functions revealed that theover-dependence on exploitation of oil by African oil producing countries without a corresponding diversification and switching to alternative sources of energy leads to ineffectiveness of oil economies in Africa to confront and combat some negative impacts of global oil price shocks. Findings from the study equally showed that the economies of oil producing countries in Africa are prone to shocks from the US real interest rate which represents the foreign interest rate. Finally, the study also showed that the expansionary monetary policy (in which interest rate is reduced to stimulate investment) is more effective in compensating and offsetting the negative effect of the decline in global oil price in the selected African oil producing countries.

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