Public Spending and Private Sector Investment in Nigeria: An Investigation of the Crowding-in (or Crowding-out) Effect Amidst Deteriorating Fiscal Balance

Alymkulova, Nargiza; Iorember, Paul Terhemba; Omotesho, O. A.

doi:10.1007/978-3-031-30541-2_15

Cited by 1 publication

(1 citation statement)

References 31 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In other words, does public spending respond to positive and negative changes in unconditional federal transfers in the same manner? The two categories of asymmetry of the flypaper effect identified in the extant literature are the fiscal replacement and the fiscal restraint paradigms (Alymkulova et al, 2023;Gbaka et al, 2022;Zhou et al, 2022;Bature et al, 2022;Sour, 2013). The fiscal replacement category occurs when there is a reduction in federal transfers, but the local authorities prefer to keep public spending at the same level by generating more taxes or growing the local public debt.…”

Section: The Flypaper Effect In Theorymentioning

confidence: 99%

Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa

Isik,

Golit,

Iorember

2023

View full text Add to dashboard Cite

The flypaper effect is undoubtedly among the most interesting concepts in subnational government spending behavior. This study is the first attempt to provide empirical evidence on the existence of the flypaper effect in the two largest economies in Sub-Saharan Africa: Nigeria and South Africa. Using the two-step system generalized method of moment’s estimator, our results show that the flypaper effect exists for both state and provincial governments in Nigeria and South Africa. Provincial governments in South Africa are found to be more responsive to positive changes in unconditional federal transfers than state governments in Nigeria. We therefore recommend sensitization on the receipt and disbursement of unconditional federal transfers. This will help reduce the illusion or information asymmetry about the use of unconditional federal transfers.

show abstract

Section: The Flypaper Effect In Theorymentioning

confidence: 99%