| Popis: |
The effect of global oil price fluctuations on households’ costs of living in Nigeria is examined. We extend a simplified model of the microeconomic implication of macroeconomic shocks that allows for cross-sectional heterogeneity in households’ distributions and consumption preferences. First, we show the effect of global oil price shocks heterogeneously varies depending on households’ preferences and consumption bundles. Second, due to the oil economies' enclave nature, we show that shocks would create a specific distributional effect that is more pronounced on households closely related to the oil economy. For the empirical analysis, we use oil prices between the years 2009 to 2015 and micro-level data from the Nigerian General Household Survey (GHS) collected between 2010 and 2016 in Nigeria. Our empirical results confirm our prediction: oil prices have a differential effect depending on how closely the regional economy is tied to oil production. We also find evidence supporting consumption substitution strategies, adjustments in household size, and labor supply as some coping responses to oil price changes. JEL: D1, O12, O55 |
