Government Expenditure and Economic Growth in Tanzania: A Time Series Analysis (Published)
This study empirically examines the long-run and short-run relationship between government expenditure and Economic growth in Tanzania over the period of 1996-2014 making the use of annual secondary time series data. The Error Correcting Model (ECM) is employed to examine the long-run and short-run estimates of parameters. In addition to that the granger causality test is employed to determine whether government expenditures granger causes economic growth. In the long-run government expenditure is found to be statistically significant and has positive relationship with economic growth. The short -run estimates show there is no significant relationship between government expenditures and economic growth. The results of granger causality test show uni-directional causality running from economic growth to government expenditures. The government of Tanzania should improve in the allocation of resources in its development expenditure and social services expenditure and channel such expenditure to allow for private sector participation and infrastructure development in order to accelerate economic growth.
Keywords: Government Expenditure, Tanzania, Time Series Analysis, economic growth
An Assessment of the Casual Relationship between Economic Growth and Indirect Taxes in Nigeria (Published)
The study examines the causal relationship between economic growth and indirect taxes in Nigeria. Ex-post facto research design was employed and time series data were sourced from Central Bank Nigeria (CBN) statistical bulletin of various years 1994-2014. Multiple regression inferential statistics was used for data analysis. The result reveals that VAT has a positive significance effect on GDP. This is because the computed t-statistic of 3.142 is greater than the critical value table value of 2.120. The result of the second hypothesis also showed that the computed t- statistic of 4.557 is greater than the critical table value of 2.120 thus, proving that CED actually has a positive significance effect on GDP. The study conclude and that VAT and CED as indirect taxes contributes to economic growth in Nigeria, hence government should intensify effort to ensure immediate response of payment by the general public as flow of fund will encourage faster economic growth.
Keywords: Custom and Excise duties, Gross Domestic Product, Value Added Tax, economic growth
Inflation and Growth Nexus in Nigeria: An Investigation into the Simultaneous Relationship (Published)
The relationship between inflation and economic growth remains an unresolved debate in empirical research. Its relevance in understanding growth behavior however remains pertinent. It is in this light that this study seeks to understand inflation and growth nexus in Nigeria. The study employs a two stage least square estimation to examine a simultaneous equation model with data from the Central Bank of Nigeria Statistical Bulletin and World Bank Indicators. The study shows that inflation is beneficial to growth though not significantly while growth is significantly beneficial to inflation; given the positive relationship between inflation and growth and the negative relationship between growth and inflation. The results further show that Money supply and trade openness are significant determinants of real GDP for all three estimation techniques under consideration. While, real GDP, money supply and interest rate are significant determinants of inflation. The study therefore recommends that inflation be controlled to have its optimal effect on output while production be diversified to optimize its effect on inflation.
Keywords: Inflation, Nigeria, Simultaneous Relationship, economic growth
Does Economic Growth Influence Government Expenditure? Evidence from Nigeria (Published)
The main focus of this study is to investigate the impact of economic growth on government expenditure in Nigeria covering the periods 1970 to 2013. Gross Domestic Product (GDP) was used as a proxy for economic growth, and the GDP time series was decomposed using the partial sum approach in order to achieve asymmetry in the variable. The asymmetric ARDL estimation technique was appropriately employed in this study. The findings of this study revealed that economic growth has significant impact on government expenditure in Nigeria. The study further provided evidence of bi-causality between expansion in economic growth (GDP_P) and government expenditure in Nigeria. The study recommended among others that proactive steps must be taken by governments to stimulate economic growth through production.
Keywords: Aggregate demand and Granger Causality, Asymmetric ARDL, Government Expenditure, economic growth
Economic Growth and Unemployment in Fiji: A Cointegration Analysis (Published)
Fiji has been experiencing high unemployment rate since 1990s. Unemployment has become increasingly more pronounced from 2000 due to the political instability, expiry of land leases and operational problems in garment and gold industry. On the other hand, there was a surge in number of graduates following the establishment of two new universities. Additionally a sharp decline in investment in the post coup years of 2000 ensued, contributing to further increase in unemployment rate and sluggish economic growth. This paper seeks to investigate whether long run association among growth and unemployment is relevant for Fiji for the period 1982-2012. Johansen Cointegration test procedure has been applied to ascertain the assocaition among growth, investment and unemployment. Result confirmed the evidence of long-run association among unemployment and growth, with cointegration running from investment and unemployment to increase in economic output. Economic policies should gear towards improving investment.
Keywords: Fiji, Unemployment, economic growth, investmnent
Capital Market Activities and Economic Growth in Nigeria: Further Evidence from VAR Methodology (Review Completed - Accepted)
This study further investigates the impact of capital market activities on economic growth in Nigeria using vector autoregressive (VAR) methodology. Capital market as a mechanism for economic development aids to provide alternative long term finance in the face of high cost of fund. While this crucial role has been over-emphasized by different scholars, but no attempt have been made to embark on a rigorous analysis, particularly, to demonstrate the feedback effect among variables included in a model explaining the relationship between capital market activities and economic growth. In order to address this problem, the study adopts VAR analysis. The investigation reveals that increase in capital market activities contributed significantly to economic growth. Also, the findings show that there is a long-run relationship between economic growth and capital market activities. The model proved to possess strong predictive ability using the values of mean absolute error (MAE) and root mean squares error (RMSE). The paper concluded that, economic growth could be enhanced by focusing on the salient capital market variables with appropriate policies and efficient infrastructural development.
Keywords: Capital market, Co-integration and VAR, Unit roots, economic growth
FOREIGN PRIVATE INVESTMENT AND ECONOMIC GROWTH IN NIGERIA (1980 – 2010) (Published)
The study examined the impact of foreign private investment on Nigeria economic growth between 1980 and 2010. The empirical analysis was based on multiple regression technique. Economic growth was proxied by Gross Domestic Product and the result showed that foreign private investment, gross fixed capital formation and net export are positively related with economic growth while inflation rate has a negative relationship with economic growth. Hence increased inflow of foreign private investment into the country enhances economic growth in Nigeria. It is recommended that government should therefore strive to provide a conducive environment for foreign private investment in Nigeria through appropriate fiscal, monetary and general economic policies and stable macroeconomic environment.
Keywords: Foreign Private Investment and Inflation rate, Investment, economic growth
Is Wagner’s Law a Myth or a Reality? Empirical Evidence from Nigeria (Published)
This study attempted to examine the long-run relationship and direction of causality between economic growth and government spending with consideration for exchange rate, consumer prices and monetary policy rate. This is with a view to determine the validity of Wagner’s law in Nigeria during the period 1961 to 2011. Times series data on variables such as real GDP, government expenditure, exchange rate, inflation rate and monetary policy rate during the period (1961-2011) were used. These data were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin 2011 Edition; World Development Indicator (WDI) Latest version and Federal Ministry of Finance. The study identified the order of integration of the variables used in the study using Phillips-Perron unit root test. The test was conducted with a drift and Time trend. The study also employed Johansen multivariate cointegration tests to determine if a group of I(1) variables converge to a long-run equilibrium. Vector Error Correction Mechanism was employed to model causal relation between economic growth and government spending. The results showed that variables are individually integrated of order one that is, a I(1) process. Johansen multivariate cointegration test showed that variables are cointegrated. Both the Trace test and Maximum-Eigen test suggest one cointegrating vector. The result of VECM estimates provided evidence in support of long-run causality running from real GDP to government spending. However, while evidence exists for long-run causality running from real GDP to government spending such evidence does not exist for short-run causality in this same direction. This indicates that Wagner’s Law is supported only in the long-run. The study therefore concludes that Wagner’s law is never a Myth but a Reality in Nigeria over the sample period.
Keywords: Cointegration, Government spending, Long-run causality, Short-run causality., economic growth
Small and Medium Scale Enterprises and Economic Growth in Nigeria (Review Completed - Accepted)
ABSTRACT
The study empirically evaluates the impact of small and medium scale enterprises on the growth of the Nigerian economy using the error correction method (ECM). The study adopted annual times series data for Nigeria spanning a period of 43 years (1970 to 2012). The finding of our results suggests that the theoretical modeling requirements for all the variables used in the regression satisfy the statistical requirements that determine the choice of the statistical model. The result from the estimated model shows that both human capital development (HCD) and bank loans to small and medium scale enterprises (BLSME) were statistically significant as well as positively influence the growth of the Nigerian economy. Therefore, more concerted effort should be employed by government at all level to make training and retraining of their man–power both in public and private sectors to acquire the necessary skills required in modern business technique. This will boost their efficiency and productivity as well as bolster its share in the growth of the country’s economy. In the light of the foregoing, we recommend that government at all level should provide incentives and favourable business environment for SMEs to flourish. It should also sustain the current ongoing reforms in the sector to stimulate productivity as well as the continuous enlightenment campaign by the Central Bank of Nigeria, banking industries, relevant government ministries and agencies while indigenous entrepreneurs must be ready to show greater desire to institutionalize and separate company from self and be ready to be helped
Keywords: Error correction method, SMEs, Stability, economic growth