Crude oil price shocks and macroeconomic performance in Africa's oil-producing countries

The study investigates the influence of crude oil price shocks on the macroeconomic performance of Africa's oil-producing countries. Eight major net oil producers, namely, Algeria, Nigeria, Egypt, Angola, Gabon, Equatorial Guinea and Congo Republic are included in the study. Sudan is excluded due to data constraints. The study covers the period between 1980 and 2016, which represents the periods with the most boom and bust movements in crude oil prices. The Hamilton Index (1996) which uses the net oil price increase is applied. The study compares the price of oil in each quarter with the maximum value observed during the preceding four quarters. This is used to derive sharp increases and declines in oil prices to capture oil price shocks. A Panel Structural Vector Auto-Regression model is adopted for analysis. The results show that the reaction of output to sharp increases and declines in oil prices differ. It is also observed that structural inflation accompanies sharp declines in oil prices more than monetary inflation, since both outputs and investment decline significantly.