Fiscal Deficit and External Debt: The Nigerian Experience (Published)
This study seeks to ascertain the impact of fiscal deficit on external debt in Nigeria with a focus on determining the long run relationship between fiscal deficit and external debt, as well as to ascertain the direction of causality between fiscal deficit and external debt. The model employed in this study is the Error Correction Mechanism; Granger causality test was used to ascertain the direction of causality. The time frame for this study spanned between the years 1981-2019. This study found that fiscal deficit is not a significant determinant of external debt in Nigeria. Also, the variables of gross domestic product, degree of openness, exchange rate was found to be insignificant factors determining external debt except inflation which was significant in determining external debt in Nigeria. Furthermore, there was neither a uni-directional nor bi-directional causality between external debt and fiscal deficit. Although, there is causality flowing from budget deficit and degree of openness as well as budget deficit and gross domestic product. However, it was suggested that policies be implemented that will enhance the channeling of funds from the external sector to productive sectors of the economy in order to ensure diversification and revenue generation thereby ultimately lessening the external debt burden that Nigeria is faced with. Finally, there is need for fiscal discipline and fiscal prudence if fiscal deficits would be a true determinant of the size of external debt accumulated in the country.
Citation: Shofade Oladapo Daniel and Kazeem Adebola Ibrahim (2021) Fiscal Deficit and External Debt: The Nigerian Experience, International Journal of Development and Economic Sustainability, Vol.9, No.3, pp.1-18
Keywords: Budget, External Debt, Fiscal Policy, economic growth, fiscal deficit
The Effect of Fiscal Policy on Economic Development: A Comparative Study on Gross Domestic Product and Human Development Index in Nigeria 1990-2017 (Published)
This study sought to provide more insights on the topic “fiscal policy and economic development” by extending its focus to examining the relationship between fiscal policy and economic development using human development index (HDI) as a more comprehensive representation of human and economic progress than the gross domestic product (GDP). The study adopts an ex-post facto research design to enable the use of Nigerian time series data from 1990 to 2017in an Ordinary Least Square (OLS) regression technique for analyses. Findings reveal that fiscal policy variables such as government revenue and expenditure have negative effect on the gross domestic product but positive and significant on human development index of Nigeria, while government debt has positive effect on GDP and significantly negative effect on HDI. Results further reveal interesting outcomes on the effect of fiscal policy on Nigeria’s economic development such trade depicting a negative and significant effect on HDI but positive and insignificant for GDP. The study, therefore recommends that using HDI to measure the effect of fiscal policy may be a better approach to measuring economic development. Also, that the government of Nigeria should engage in more productive and try to improve on the mechanisms to grow its revenue to enhance economic development in Nigeria.
Keywords: Economic Development, Fiscal Policy, Gross Domestic Product, Human Development Index
The Effect of Fiscal Policy on Financial Sector Development in Sierra Leone: A Time Series Approach (Published)
This study investigates fiscal policy impact on financial sector development in Sierra Leone between 1980 and 2015. The objective of the study is to establish the long run relationship between fiscal policy variable and financial sector development. The study used a quantitative approach; the model was formulated with Private sector credit used as a proxy variable for financial sector development. This was regressed against gross domestic product, money supply, real interest rates, inflation and total tax revenue. The study used error correction model to estimate both long term and short term effects of the explanatory variables on the dependent variables in the empirical functions. The unit root tests shows that variables in the equations were I(1) variables, meaning they were stationed at first difference using both the Augmented Dickey Fuller and Philip Pheron tests. The Johansson co integration tests concludes that there are more than one co-integrating factors in each empirical function, therefore a long run relationship exists between private sector credit and its explanatory variables. To validate the quality of the data for the use of vector auto regression, all of the tests were conducted including; lag length criteria test, serial correlation test, normality test, stability test. The result from the private sector credit and fiscal and non-fiscal variables in Sierra Leone contradicts most of the theoretical and empirical literature on financial sector development. The conclusion is that even when we are expecting a negative relationship between private sector credit and money supply, real interest rates, total tax revenue and inflation, the results all came out positively and significantly in long run financial economic analysis. This study shows that the private sector is willing to borrow regardless of the interest rate in the economy and the level of taxation. Basically the risk appetite in the private sector shows the level of desperation of private institution to access short to medium term capital. This might explain the reason for the high non-performing loans (NPL) in the economy of Sierra Leone.
Keywords: Fiscal Policy, Sierra Leone, Time Series, financial policies
The Effect of Fiscal Policy on Economic Development:A Comparative Study on Gross Domestic Product and Human Development Index in Nigeria 1990-2017 (Published)
This study sought to provide more insights on the topic “fiscal policy and economic development” by extending its focus to examining the relationship between fiscal policy and economic development using human development index (HDI) as a more comprehensive representation of human and economic progress than the gross domestic product (GDP). The study adopts an ex-post facto research design to enable the use of Nigerian time series data from 1990 to 2017in an Ordinary Least Square (OLS) regression technique for analyses. Findings reveal that fiscal policy variables such as government revenue and expenditure have negative effect on the gross domestic product but positive and significant on human development index of Nigeria, while government debt has positive effect on GDP and significantly negative effect on HDI. Results further reveal interesting outcomes on the effect of fiscal policy on Nigeria’s economic development such trade depicting a negative and significant effect on HDI but positive and insignificant for GDP. The study, therefore recommends that using HDI to measure the effect of fiscal policy may be a better approach to measuring economic development. Also, that the government of Nigeria should engage in more productive and try to improve on the mechanisms to grow its revenue to enhance economic development in Nigeria.
Keywords: Economic Development, Fiscal Policy, Gross Domestic Product, Human Development Index
Rethinking the effectiveness of fiscal allocation strategy: A focus on economic development in Nigeria (Published)
This paper developed and estimated two autoregressive distributed lag (ARDL) models to explore the empirical relationship between fiscal policy allocation strategies and economic development in Nigeria. Specifically, the impacts of public expenditures on social and community services, economic services and administration on poverty headcount and income inequality were examined between 1990 and 2017. The unit root test results show that the variables are mixed integrated. The ARDL bounds test results revealed that long run relationship exists among the variables in each of the models. The ARDL estimates reveal that public capital expenditure on economic services in addition to expenditure on social and economic services have significant positive impact on poverty headcount in the short run. The result further indicates that expenditure on administration negatively influenced the poverty level. More so, expenditure on economic services and income inequality are relatively related in the short run while public expenditure on social and community services play significant in reducing income inequality in both short and long run. Therefore, it is recommended that fiscal policy allocation should made adequate provision for investments in social and economic services in order to create better opportunities for everyone in a view to reducing the income divide within the Nigerian economy.
Keywords: ARDL and Nigeria, Fiscal Policy, Income Inequality, Poverty, public investments
The Role of Fiscal Policy in Achieving Economic Stability in Jordan (Published)
The present investigation inspected the effect of fiscal approach estimated by (Government use, Government incomes, inward open obligation, outside open obligation) notwithstanding fares and swelling factors on the Jordanian GDP development. Fiscal approach assumes a huge job in a monetary arrangement because of its capacity to acknowledge objectives went for by a national economy. Its instruments are viewed as one of the primary financial devices to accomplish monetary development and beat obstructions to monetary soundness. Notwithstanding its distributional and pro impacts, financial arrangement has steadiness initiating impacts, for example, government spending and expenses which impact total interest, along these lines influencing in general monetary factors and financial development. The significance of fiscal arrangement radiates from the way that open spending is viewed as the prime drive for financial movement of a nation by affecting the dimension of total interest and subsequently monetary development. Open incomes fill in as the principle wellspring of salary for a nation while open obligation is a piece of the administration’s spending, regardless of whether inside or outer. This paper introduces a utilization of a hypothetical model to survey the impacts of monetary arrangement on financial development.
Keywords: Economic Stability., Fiscal Policy, Gross Domestic Product, Jordanian economy., economic growth