Public Spending, Fiscal Sustainability and Macroeconomic Performance in Nigeria
No Thumbnail Available
This paper examines fiscal sustainability in Nigeria, vis-à-vis the economic performance in the country. Using the framework of an intertemporal budget constrain for the government, a fiscal sustainability equation is derived and the conditionality for establishing sustainability is ascertained. The empirical strategy applies the unit root test, cointegration test and dynamic OLS (DOLS) regression approach for testing the sustainability of the fiscal stance from 1961 to 2016. The empirical evidence shows evidence of weak sustainability especially as reported in the DOLS regression result. Similarly, the result for the effect of fiscal sustainability and economic performance also reports weak response of economic performance to fiscal sustainability. On the overall, the evidence from this study does not significantly deviate from extant studies in this strand of the literature. The main policy implication of this research is that the Nigerian government should ensure a more robust and systemic link between tax and expenditures policies and the evolution of public debt. In passing, a focus on determining a short-term government constrain framework and fiscal sustainability indicators for signaling short and medium term fiscal imbalances and to correct them will be a worthwhile direction for future research.
Public Debt , Fiscal deficit , Fiscal Sustainability , Economic Performance , Intertemporal budget constraint , Research Subject Categories::SOCIAL SCIENCES::Business and economics::Economics
Saibu Olufemi Muibi (2018) Public Spending, Fiscal Sustainability and Macroeconomic Performance in Nigeria NDIC Quarterly Vol. 33 No 3&4 (2018, 33-48