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Modeling Nigerian Government Revenues and Total Expenditure: An Error Correction Model Approach

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  • Ayinde, Kayode
  • Bello, Aliyu A.
  • Ayinde, Opeyemi Eyitayo

Abstract

The national total expenditure of a country is precipitated on several factors of which revenue generated could be one and very significant. This paper therefore examines the contribution of some selected sources of Nigerian government revenue to total national expenditure. Secondary data sourced and collected from Nigerian Statistical Bulletin of the Central Bank for a period of thirty nine (39) years were used. Statistical and econometric techniques used for the data analysis are unit root test, cointegration test and the error correction model (ECM). Results showed that the original variables are non stationary but are stationary at first difference. Further investigations resulted into the use of the error correction model whose parameters’ estimation was improved by the use of Feasible Generalized Linear (FGLS) Estimator. Findings revealed significant contribution of oil revenue, federation account (federal allocation) and federal retained revenue to the Nigeria total expenditure and that Nigeria may need to be very cautious as non-availability of revenue from these sources points to non-expenditure. These become very essential if the country will have to achieve its developmental goals and objectives towards development and economic growth, among other things.

Suggested Citation

  • Ayinde, Kayode & Bello, Aliyu A. & Ayinde, Opeyemi Eyitayo, 2013. "Modeling Nigerian Government Revenues and Total Expenditure: An Error Correction Model Approach," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 160483, African Association of Agricultural Economists (AAAE).
  • Handle: RePEc:ags:aaae13:160483
    DOI: 10.22004/ag.econ.160483
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    References listed on IDEAS

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    1. Hoover, Kevin D & Sheffrin, Steven M, 1992. "Causation, Spending, and Taxes: Sand in the Sandbox or Tax Collector for the Welfare State?," American Economic Review, American Economic Association, vol. 82(1), pages 225-248, March.
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    3. Oluwole Owoye, 1995. "The causal relationship between taxes and expenditures in the G7 countries: cointegration and error-correction models," Applied Economics Letters, Taylor & Francis Journals, vol. 2(1), pages 19-22.
    4. Paul R. Blackley, 1986. "Causality Between Revenues and Expenditures and the Size of the Federal Budget," Public Finance Review, , vol. 14(2), pages 139-156, April.
    5. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    6. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "The Effect of Health on Economic Growth: Theory and Evidence," NBER Working Papers 8587, National Bureau of Economic Research, Inc.
    7. Martin Zagler & Georg Dürnecker, 2003. "Fiscal Policy and Economic Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 397-418, July.
    8. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
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    Cited by:

    1. Ayinde, Opeyemi & Ilori, T.E. & Babatunde, R.O., 2015. "Impact Of Government Agricultural Policies On The Major Staple Food Prices In Nigeria (1966 - 2011)," 2015 Conference, August 9-14, 2015, Milan, Italy 211188, International Association of Agricultural Economists.

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    Keywords

    Agricultural and Food Policy;

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