The bursting of crude oil prices in the international market since mid-2014 has resulted in dwindling oil revenue, which has led to economic recession in Nigeria. The recession has further exacerbated existing socioeconomic problems bedeviling the country. In the light of this, we examined the effect of government revenues (oil and non-oil revenues) on economic growth, both in the short-run and the long-run using autoregressive distributed lag method. Our findings show that government revenues are indispensable to economic growth in Nigeria. In addition, we found that economic growth is more responsive to oil revenue than non-oil revenue. Based on our findings, we advocate for effective and efficient use of government revenues. Furthermore, since oil revenue fluctuates more than non-oil revenue, we further advocate for creation of an enabling business environment geared towards improving the contribution of the non-oil sector to the government revenue base.
This study provides additional information about the drivers of external reserves in Nigeria. The result using Autoregressive Distributed Lag (ARDL) model estimation approach for the period 1980-2015 shows that remittances, among other macroeconomic variables, increased external reserves in the short run but weakens it in the long run. Remittances depletes external reserves through its effect on inflation rate and the nonsterilized intervention of the Central Bank. Furthermore, regime shift to relatively floating exchange rate causes remittances to increase reserves. From the foregoing, it is important for the authorities to continue operating relatively flexible exchange rate, and curtail excessive spending of remittances. Keywords: , , , , . JEL Classification: F31, F24, C22, F31
The study examined the effect of value creation through public debt on economic growth in Nigeria between 1986 and 2016 using Autoregressive Distributed Lag (ARDL). The variables used in the study are a real gross domestic product, internal debt, external debt and Total debt service of Nigeria. They were tested for stationarity using the Augmented Dickey-Fuller and Philip Perron test. The result showed that the variables are stationary at first differencing. Co-integration test was also performed and the result revealed the presence of co-integration between public debt and economic growth. The co-integration results show that public debt and economic growth have long run relationship. The findings of the ARDL model via short run model result and long-run model result between public debt and economic growth in Nigeria is that in the short run external debt and internal debt are negatively related to the real gross domestic product but has effect on the economic growth, external debt is negatively related but has no effect to the economic growth. Whereas in the long run model, internal debt and debt service are also negatively related to the real gross domestic product but significant to the economic growth, external debt is positively related but has no effect to the economic growth. The study concluded that public debt and economic growth have long-run relationship, and they are positively related if the government will create the value that citizens desired by being sincere with the loan obtained and use it for the development of the economy rather than channel the funds to their personal benefit.
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