Short-term dynamics and long-term relationship between natural gas consumption and economic growth in Nigeria: an ARDL approach with breaks

Galadima, Mukhtar Danladi; Aminu, Abubakar Wambai; Adam, Ibrahim Muhammad; Adamu, Ibrahim Mohammed; Suleiman, Hassan Hassan

Short-term dynamics and long-term relationship between natural gas consumption and economic growth in Nigeria: an ARDL approach with breaks

2022

Galadima, Mukhtar Danladi | Aminu, Abubakar Wambai | Adam, Ibrahim Muhammad | Adamu, Ibrahim Mohammed | Suleiman, Hassan Hassan

This paper investigates the short-term dynamics as well as the long-term relationship between natural gas consumption and economic growth in Nigeria, taking breaks into account. The techniques employed include Shahbaz-Omay-Roubaud unit root test with sharp and smooth breaks and autoregressive distributed lag (ARDL) model with breaks. The results revealed that natural gas consumption is positively related to growth both in the short-term and long-term but only significant in the latter. However, there is evidence of bidirectional causality in the long-term and unidirectional causality in the short-term, from growth to natural gas consumption. The implication of the findings is that natural gas is a contributing factor to the growth of the Nigerian economy, and any energy policy aimed at increasing the consumption of natural gas could lead to the increase in economic growth and that Nigerian authorities could adopt energy conservation policies in the short-term so as to take the issue of global warming into consideration. Therefore, the paper recommends stepping up efforts to increase natural gas consumption by building more gas storage facilities, pipeline installations, exploring alternative energy sources, raising awareness/enlightenment about the uses of natural gas, suitability in its use, economic and environmental benefits of its use, ensuring its affordable availability, and beeping up security against pipelines vandalization. Moreover, in the short-term, the country could enact energy conservation policies to combat global warming.

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