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The tax-spend nexus in Nigeria: Evidence from Nonlinear Causality


  • Olalekan Bashir Aworinde

    () (Tai Solarin University of Education, Nigeria & University of Bath, UK.)


The study investigates the linear and nonlinear causal linkages between the tax-spend nexus in Nigeria for the periods 1961-1992, 1993-2012 and1961-2012. Employing a nonparametric causality test of Diks and Panchenko (2006) as well as the parametric causality test using the VAR model, results show that there is evidence of uni-directional linear causality from government revenue to government expenditure in the first period and uni-directional nonlinear causality from government revenue to government expenditure in the second and third periods. However, the nonlinear causal relation evidence that government revenue Granger cause government expenditure disappears after the VAR filtering. The policy implication of this result is that government should intensify efforts to improve her revenue accompanied with appropriate fiscal expenditure reforms.

Suggested Citation

  • Olalekan Bashir Aworinde, 2013. "The tax-spend nexus in Nigeria: Evidence from Nonlinear Causality," Economics Bulletin, AccessEcon, vol. 33(4), pages 3117-3130.
  • Handle: RePEc:ebl:ecbull:eb-13-00775

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    References listed on IDEAS

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    Cited by:

    1. Phiri, Andrew, 2016. "Asymmetries in the revenue-expenditure nexus: New evidence from South Africa," MPRA Paper 75224, University Library of Munich, Germany.
    2. repec:seb:journl:v:15:y:2017:i:1:p:47-61 is not listed on IDEAS

    More about this item


    Expenditure; Revenue; nonlinear causality; Nigeria;

    JEL classification:

    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook


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