Are public spending determinants significant in per capita budget spending decisions in Nigeria?

Abstract

The motivation for this study had been to assess whether the established determinants of public spending decisions in Nigeria which are government revenue, the inflation rate, the exchange rate, the growth rate of real gross domestic product, and the international price of oil, do actually affect per capita budget spending as assumed by the fiscal authorities. However, evidence from the baseline symmetric and asymmetric auto-regressive distributive lag regressions suggest otherwise. A further probe by adding population growth rate, and gross fixed capital formation to the baseline variables to have a robust regression, suggests that while gross fixed capital formation which measures for infrastructure development was insignificant, population growth rate was crucial for the instituted determinants to exert substantial effect on per capita spending. This outcome can be taken as evidence of why the budget on a yearly basis is being perceived by most citizens as an ineffective tool of fiscal policy. Since the fiscal authorities have continued to always assume that factors that play crucial role in formulating their spending decisions; are the same with those necessary in deciding the share of Nigerians in the budget; without due consideration for population growth. Hence, ridiculing whatever goal the budget is set out to achieve.

Non-Linear Effect of Government Debt on Public Expenditure in Nigeria: Insight from Bootstrap ARDL Procedure

“…A percent increase in oil rents raises public expenditure (as a share of the GDP) by 0.313 percent and 0.162 percent in the long-and short-term, respectively. The positive relationship between oil rents and public expenditure is consistent with the outcome of past studies (Abu et al, 2022;Adedokun, 2018;Aladejare, 2020;Aregbeyen & Fasanya, 2017;Jibir & Aluthge, 2019). Thus, an increase in oil rents raises government's income, enhances its capacity to embark on developmental projects and investments, leading to an expansion in the level of public expenditure.…”

“…Equally, it is well documented in the literature that output growth (Y) is a potential determinant of public expenditure. Interestingly, recent studies on public expenditure dynamics in Nigeria illustrated that real output growth rate is a relevant determinant of public expenditure in the country (Aladejare, 2013(Aladejare, , 2019(Aladejare, , 2020Ukwueze, 2015). Additionally, the role of urbanisation (URBAN) in public expenditure has been advanced in the literature (Akanbi, 2014;Akanbi & Schoeman, 2010;Aregbeyen & Akpan, 2013;Firoj et al, 2018;Shonchoy, 2010).…”

“…Similarly, public expenditure declined following increases in public debt stock in 1994in , 2000in , 2012in . Whereas rising public debt in the 1984in -1993in , 1995in , 1997in -1999in , 2007in -2011in , 2013in -2020 periods coincided with an expansion in public expenditure, the reduction in government debt in 1996, 2005 and 2006 saw public expenditure increase in the same period.…”

Macroeconomic Factors and the Prospects of Economic Prosperity in a Developing Economy: Evidence from Dynamic ARDL Simulations and KRLS Techniques

“…Thus, pointing to the fact that economic prosperity for Nigeria might signi cantly be a function of the combination of factors other than resource price. To buttress further, since the 2000s, policymakers in the country have simultaneously considered macroeconomic parameters such as the in ation and exchange rates, government revenue, foreign price of oil, and growth rate of real GDP in the yearly budget planning but with insigni cant impact on promoting economic prosperity (Aladejare, 2022a).…”

Macroeconomic Factors and the Prospects of Economic Prosperity in a Developing Economy: Evidence from Dynamic ARDL Simulations and KRLS Techniques

“…The Nigerian economy is the focus of this study because it has continuously exhibited inflationary and exchange rate challenges due to its structural distinctiveness (Aladejare, 2022a). Despite being the first and sixth oil-producing nation in Africa and the world, Nigeria lags behind some of its African and world contemporaries in income growth (measured in GDP per capita).…”