Fiscal deficit and Nigeria economic growth (1990-2020)

https://doi.org/10.21744/irjmis.v8n5.1915

Authors

  • Chigbo Nkeiruka Chinyere Department of Accounting, Banking, and Finance, Faculty of Management Sciences, Delta State University, Abraka, Nigeria

Keywords:

economic growth, error correction model (ECM), fiscal deficit, government expenditure, total federation collection revenue

Abstract

This paper focuses on fiscal deficit and Nigeria's economic growth. To achieve the objective of this study diagnostic check and unit root test using Phillips perron was employed to investigate time series data and to test the stationarity of the time series of the variables. Johansen co-integration analysis and Error Correction Model (ECM) are employed to test for a relationship between or among variables. The paper concludes that the driving variables of economic growth in Nigeria were Public external debt-PEXD, total federal collection revenue-TFCR, and interest rate-INTR. The public deficit financing was determined based on the study by the variables of Government expenditure (GOVE), real GDP, exchange rate-EXCR. The best model of ECM to determine the impact of fiscal deficit in Nigeria is the interaction with economic growth performance measures in Nigeria. The findings confirm that one standard deviation of shocks of fiscal deficit has a significant influence on economic growth, hence confirming the long-run relationship. The search recommended that Government should set its priority rights, be more committed to the budget implementation, and pay more attention to capital expenditure geared towards economic growth.

Downloads

Download data is not yet available.

References

Acemoglu, D. (2012). Introduction to economic growth. Journal of economic theory, 147(2), 545-550. https://doi.org/10.1016/j.jet.2012.01.023

Aero, O., & Ogundipe, A. A. (2018). Fiscal deficit and economic growth in Nigeria: Ascertaining a feasible threshold. International Journal of Economics and Financial Issues, 8(3), 296.

Ahmad, A. J. (2014). A mechanisms-driven theory of business incubation. International Journal of Entrepreneurial Behavior & Research.

Alam, I., & Quazi, R. (2003). Determinants of capital flight: An econometric case study of Bangladesh. International Review of Applied Economics, 17(1), 85-103.

Ali, M. B., Mandara, B., & Ibrahim, M. A. (2018). Impact of deficit financing on economic growth in Nigeria. Global Journal of Management and Business Research.

Anike, H. O. O., Okafor, C. N., & Udejinta, N. B. (2017). The role of public enterprises in economic development in Nigeria. International research journal of management, IT and social sciences, 4(2), 179-189.

Anyanwu, J. C. (1997). Poverty in Nigeria: Concepts, measurement and determinants. Poverty alleviation in Nigeria, 93-120.

Apergis, N., & Payne, J. E. (2012). Renewable and non-renewable energy consumption-growth nexus: Evidence from a panel error correction model. Energy economics, 34(3), 733-738. https://doi.org/10.1016/j.eneco.2011.04.007

Arrow, K., Bolin, B., Costanza, R., Dasgupta, P., Folke, C., Holling, C. S., ... & Pimentel, D. (1995). Economic growth, carrying capacity, and the environment. Ecological economics, 15(2), 91-95. https://doi.org/10.1016/0921-8009(95)00059-3

Boadway, R., Marchand, M., & Vigneault, M. (1998). The consequences of overlapping tax bases for redistribution and public spending in a federation. Journal of public Economics, 68(3), 453-478. https://doi.org/10.1016/S0047-2727(98)00018-8

Dilliana, S. M., Gayatri, G., Ratnadi, N. M. D., & Wirajaya, I. G. A. (2019). Regional Financial Performance Mediates the Effect of Regional Balance Funds and Expenditures on Economic Growth. International Research Journal of Management, IT and Social Sciences, 6(6), 164-171.

Engle, R. F., Granger, C. W., & Hallman, J. J. (1989). Merging short-and long-run forecasts: An application of seasonal cointegration to monthly electricity sales forecasting. Journal of econometrics, 40(1), 45-62.

Halkos, G. E., & Paizanos, E. ?. (2013). The effect of government expenditure on the environment: An empirical investigation. Ecological Economics, 91, 48-56. https://doi.org/10.1016/j.ecolecon.2013.04.002

Hinchliffe, K. (1989). Federation and educational finance: primary schooling in Nigeria. International Journal of Educational Development, 9(3), 233-242. https://doi.org/10.1016/0738-0593(89)90054-0

Jalil, A., Tariq, R., & Bibi, N. (2014). Fiscal deficit and inflation: New evidences from Pakistan using a bounds testing approach. Economic Modelling, 37, 120-126. https://doi.org/10.1016/j.econmod.2013.10.029

Jhingan, S., Nojiri, S., Odintsov, S. D., Sami, M., Thongkool, I., & Zerbini, S. (2008). Phantom and non-phantom dark energy: The Cosmological relevance of non-locally corrected gravity. Physics Letters B, 663(5), 424-428.

Khandelwal, V. (2015). Impact of energy consumption, GDP & Fiscal deficit on public health expenditure in India: An ARDL bounds testing approach. Energy Procedia, 75, 2658-2664. https://doi.org/10.1016/j.egypro.2015.07.652

Kim, K. H. (2003). Dollar exchange rate and stock price: evidence from multivariate cointegration and error correction model. Review of Financial economics, 12(3), 301-313. https://doi.org/10.1016/S1058-3300(03)00026-0

Mauro, P. (1998). Corruption and the composition of government expenditure. Journal of Public economics, 69(2), 263-279. https://doi.org/10.1016/S0047-2727(98)00025-5

Momodu, A., & Monogbe, T. (2018). Budget deficit and economic performance in Nigeria. Saudi Journal of Business and Management Studies.

Mordi, C. N., Adebiyi, M. A., Adenuga, A. O., Fowowe, B., & Obiechina, M. E. (2010). Central Bank of Nigeria. Economic and Financial Review, 48(1).

Narayan-Parker, D. (Ed.). (2005). Measuring empowerment: Cross-disciplinary perspectives. World Bank Publications.

O’Dwyer, B., Owen, D., & Unerman, J. (2011). Seeking legitimacy for new assurance forms: The case of assurance on sustainability reporting. Accounting, Organizations and Society, 36(1), 31-52.

Ogunsakin, S., & Lawal, N. A. (2015). Fiscal deficit and economic growth, Nigeria Experience. International Educative Research Foundation, 2(4), 6-15.

Onwioduokit, E. A. (2005). Fiscal deficit, inflation and output growth in Nigeria: a vector error correction model approach. Journal of Economics and Financial Studies, 2(1).

Onwioduokit, E. A. (2012). An empirical estimation of the optimal level of fiscal deficit in the West African Monetary Zone. Journal of Monetary and Economic Integration, 12(1), 1-33.

Perron, P. (1989). The great crash, the oil price shock, and the unit root hypothesis. Econometrica: journal of the Econometric Society, 1361-1401.

Sharma, V., & Mittal, A. (2019). Macroeconomic effects of fiscal deficit on Indian economy: An empirical analysis. IOSR Journal of Humanities and Social Science (IOSR-JHSS) Volume, 24, 60-69.

Published

2021-09-10

How to Cite

Chinyere, C. N. (2021). Fiscal deficit and Nigeria economic growth (1990-2020). International Research Journal of Management, IT and Social Sciences, 8(5), 411-433. https://doi.org/10.21744/irjmis.v8n5.1915

Issue

Section

Peer Review Articles