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Nigeria's growth record : Dutch disease or debt overhang ?


  • Budina, Nina
  • Pang, Gaobo
  • van Wijnbergen, Sweder


Nigeria's oil boom has not brought an end to perennial stagnation in the non-oil economy. Is this the unavoidable consequence of the resource boom or have misguided policies contributed? This paper indicates that the extreme volatility of expenditure rather than Dutch Disease effects are behind the disappointing non-oil growth record. Fiscal policies failed to smooth highly volatile oil income; on the contrary government expenditure was more volatile than oil income. The authors provide econometric evidence showing that volatility of expenditure was increased by debt overhang problems. Moreover, they also find evidence of voracity effects that exacerbated expenditure volatility prior to 1984.

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  • Budina, Nina & Pang, Gaobo & van Wijnbergen, Sweder, 2007. "Nigeria's growth record : Dutch disease or debt overhang ?," Policy Research Working Paper Series 4256, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4256

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    Cited by:

    1. Demachi, Kazue, 2012. "The effect of crude oil price change and volatility on Nigerian economy," MPRA Paper 41413, University Library of Munich, Germany.
    2. repec:ipg:wpaper:2014-492 is not listed on IDEAS
    3. Brahmbhatt, Milan & Canuto, Otaviano & Vostroknutova, Ekaterina, 2010. "Dealing with Dutch Disease," World Bank - Economic Premise, The World Bank, issue 16, pages 1-7, June.
    4. Kirk Hamilton & John Hartwick, 2008. "Oil Stock Discovery and Dutch Disease," Working Papers 1163, Queen's University, Department of Economics.
    5. Hasanov, Fakhri, 2009. "Analyzing price level in a booming economy: the case of Azerbaijan," MPRA Paper 29555, University Library of Munich, Germany.
    6. Toto Same, Achille, 2009. "Transforming natural resource wealth into sustained growth and poverty reduction : a conceptual framework for Sub-Saharan African oil exporting countries," Policy Research Working Paper Series 4852, The World Bank.
    7. Al-mulali, Usama & Che Sab, Normee, 2010. "Oil Shocks and Kuwait’s Dinar Exchange Rate: the Dutch Disease Effect," MPRA Paper 26844, University Library of Munich, Germany.
    8. Sandrine Kablan & Josef Loening & Yasuhiro Tanaka, 2014. "Is Chad Affected by Dutch or Nigerian Disease?," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 3(5), pages 278-295.
    9. Omgba, Luc Désiré, 2015. "Why Do Some Oil-Producing Countries Succeed in Democracy While Others Fail?," World Development, Elsevier, vol. 76(C), pages 180-189.
    10. Loïc Batté & Agnès Bénassy-Quéré & Benjamin Carton & Gilles Dufrénot, 2009. "Term of Trade Shocks in a Monetary Union: an Application to West-Africa," Working Papers 2009-07, CEPII research center.
    11. Demachi, Kazue, 2013. "Capital Flight and Transfer from Resource-Rich Developing Countries," MPRA Paper 50273, University Library of Munich, Germany.
    12. Brown, Martin & Lane, Philip R., 2011. "Debt overhang in emerging Europe ?," Policy Research Working Paper Series 5784, The World Bank.
    13. International Monetary Fund, 2016. "Côte d’Ivoire; Selected Issues," IMF Staff Country Reports 16/148, International Monetary Fund.

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    Public Sector Expenditure Analysis&Management; Economic Theory&Research; Public Sector Economics&Finance; Markets and Market Access; Economic Stabilization;

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