Papers by Taofik M Ibrahim
Social Science Research Network, Sep 25, 2012
RePEc: Research Papers in Economics, Oct 21, 2017
This paper reexamines the government expenditure-revenue nexus in Nigeria from 1970 to 2015. It u... more This paper reexamines the government expenditure-revenue nexus in Nigeria from 1970 to 2015. It utilizes the Lee and Strazicich (2003 and 2004) unit root tests that endogenously determines two/one structural breaks in intercept and slope to ascertain the stationarity of the data. The Toda-Yomamoto modified Wald (MWALD)-based causality test that arbitrage between the results with and without structural breaks was conducted to determine the direction of causality between the government expenditure and revenue. The results for the causality test without break suggest that bi-directional causality exists between government expenditure and revenue suggesting the existence of the fiscal synchronization hypothesis. However, the causality test with break reveals a unidirectional causality running from government expenditure to revenue indicating that the spend-revenue hypothesis holds. This finding is a clear departure from other studies on oil rich countries; thus indicating that accounting for structural break is vital when determining the relationship between government expenditure and revenue for resource countries. This study, therefore, suggests that government should embark on the diversification of the economy away from oil in order to promote reliable and sustained sources of revenue for the nation.
MPRA Paper, 2016
The link between economic development and human capital investment cannot be overemphasized. The ... more The link between economic development and human capital investment cannot be overemphasized. The 2015 Human Development Index (HDI) placed Nigeria in the 154 th position out of 169 countries. Public spending on education and health care, being major determinants of human capital are generally low in Nigeria. Illustratively, the 2015 total national budgetary share to education and health was 6.36% and 7.01%, respectively (See, Budget Office of the Federation, 2015). The outcome of inadequate education and health spending has persistently lowered the standard of the sectors in the country. The foregoing suggests that human capital in Nigeria is severely underdeveloped. Therefore, this study examines the effect of government expenditure on education and health on economic growth using error correction modelling approach. The study concludes that human capital formation is key to national development.
African Journal of Sustainable Development, 2017
This paper examines the determinants of non-oil revenue in Nigeria in the context of sustainabili... more This paper examines the determinants of non-oil revenue in Nigeria in the context of sustainability, with a view to assessing the crucial role of domestic resource mobilization. To determine the short and long run drivers, the autoregressive distributed lag (ARDL) bound test technique for co-integration was utilised. Also, the Strength, Weakness, Opportunities and Threat (SWOT) analysis was used to analyse the major sources of domestic resource mobilization available to the Nigerian government. Empirical results indicate that summation of non-oil real output, annual average effective exchange rate, infrastructure, lagged value of the ratio of the total oil exports to GDP and government policy were significant in determining the levels of actual non-oil revenue. The SWOT analysis reveals that sustained growth in real GDP, domestic savings, tax, capital market, foreign direct investment, remittance, diaspora funds, sovereign wealth funds, pension funds, and infrastructure bond are important sources of domestic resource mobilization and thus, vital to Nigeria’s quest for sustained inclusive development. Keywords: Non-oil revenue drivers, domestic resource mobilization, ARDL, SWOT analysis
The importance of the agricultural sector cannot be over emphasized as agriculture does not only ... more The importance of the agricultural sector cannot be over emphasized as agriculture does not only serve the purpose of meeting a country's food needs but also serves as a source of revenue. Before the discovery of crude oil, Nigeria was the largest net exporter of agriculture product being a major source of government revenue at the time. However, successive administration's neglect of the sector and failure to diversify the economy have inhibited broad-based growth. This paper therefore examined the impact of agricultural export on inclusive growth (measured by per capita income) in Nigeria from 1981-2014 utilizing the Dynamic Ordinary Least Square (DOLS) estimation technique proposed by Stock and Watson (1993). This approach accounts for present and past effects of agricultural export on inclusive growth. The results of the paper reveal that agriculture export, gross fixed capital formation, real interest rate and government total expenditure had positive effect on per capita income (measure of inclusive growth). However, the size of the impact of agriculture export was relatively small, indicating that more needs to be done to make agriculture impact meaningful in the economy. From the findings, the study recommend suitable policy to boost agricultural output which would invariably increase agricultural export commodities leading to an increase in revenue generation which trickles down to inclusive growth.
RePEc: Research Papers in Economics, Apr 12, 2018
This paper investigates the relationship between oil price fluctuation and output performance in ... more This paper investigates the relationship between oil price fluctuation and output performance in Nigeria during the period 1970 to 2015. It synthesizes the standard neoclassical growth model and the Keynesian national income identity by augment the typical production function to include oil price as one of the factors of production and then superimpose the augmented production function on the Keynesian national income identity. The Two Stage Least Square (2SLS) estimation technique that accounts for the plausibility of endogeneity was adopted in the study. The ADF unit root and Johansen cointegration tests were used to determine the time series properties of the data used in the study. Findings suggest that oil price impacted positively on aggregate output but negatively on agricultural, manufacturing and service sector suggesting that fluctuation in oil price create uncertainty in the production capacity of the productive sectors and it also undermines the effectiveness of the government fiscal management of crude oil revenue. The study, therefore, recommends that the Nigerian government need to diversify its export revenue base in order to minimize the over reliance on crude oil. Also, the country needs to develop the local capacity of its refinery so as to reduce the importation of refined petroleum which serves as input to most productive sectors of the economy.
A research dissertation submitted to the college of economics and management science in partial f... more A research dissertation submitted to the college of economics and management science in partial fulfilment of the requirements for the award of the Master of Arts in economics of Kampala international university
Budget deficit has an implication for monetary policy formulation and thus aggregate macroeconomi... more Budget deficit has an implication for monetary policy formulation and thus aggregate macroeconomic performance. An important question often asked is whether an increase in budget deficit is able to change the money market equilibrium. In order to answer this question, this paper investigates empirically the sensitivity and validity of the Keynesian and Neoclassical propositions and the Ricardian equivalence hypothesis. The study utilized cointegration analysis and ECM methodology to ascertain the short and long-run effect of budget deficit on money demand. The results of the cointegration test confirmed the existence of a strong and stable long-term relationship among the variables in the money demand model. Also, the estimates of the ECM model indicate the existence of a short- and long-term, positive and significant relationship between money demand and budget deficit suggesting that the Keynesian and Neoclassical views hold for Nigeria. Therefore the study suggests that there sho...
International Journal of Sustainable Economy, 2014
This paper examines the determinants and sustainability of international reserves accumulation in... more This paper examines the determinants and sustainability of international reserves accumulation in Nigeria. An assessment of the short-and long-run relationship between international reserves and its driving factors between 1970 and 2010 is carried out with a view of determining its sustainability, given the need to save against future exigencies. It makes use of error correction mechanism and the bounds testing approach to co integration within an autoregressive distributed lag framework proposed by Pesaran et al. (2001). The empirical estimates reveal that variability of export earnings, and the one period lagged value of international reserves positively affect reserve holding in Nigeria while oil price negatively affect it in the long-run. The economic (GDP per capita) and environmental (CO 2 emission) measures of sustainable development also affect international reserves accumulation in the long-run. The striking result from this study is that oil price negatively affects reserve holding in the long-run but is positive in the short-run. The fi ndings suggest the need to diversify Nigeria's sources of external reserves accumulation towards more environmentally and economically sustainable activities such that the negative effects of volatile oil export earnings as well as crude oil extraction are minimized.
ERN: Other Emerging Markets Economics: Macroeconomic Issues & Challenges (Topic), 2015
Purpose – The purpose of this paper is to examine the causal link between trade openness and gove... more Purpose – The purpose of this paper is to examine the causal link between trade openness and government size for the five largest economies in Africa taking into account the role of compensation hypothesis in an economy. Design/methodology/approach – Time series data for five countries covering the period 1970 to 2010 was used for the analysis. The data was obtained from Penn table and World development indicator (WDI). The causality test adopted for this study is based on the ECM framework. This was done for each of the five countries selected. Findings – Empirical evidence show a positive causal link between trade openness and government size for Nigeria and Algeria. In the case of South Africa negative causality was found while there was no causality for Angola and Egypt. Therefore, the government of these countries need to spend productively in order to cushion the effect of exposure to risks. Research limitations/implications – The need to consider the sustainability of growth ...
European …, 2012
This study examines the long-run relationships and dynamic interactions between the government re... more This study examines the long-run relationships and dynamic interactions between the government revenues and expenditures in Nigeria over the period 1970 to 2008. The analytical technique of Autoregressive Distributed Lag (ARDL) bound test as proposed by ...
Zagreb International Review of Economics and Business, 2016
This study examined the direct/indirect long-run relationships and dynamic interactions between p... more This study examined the direct/indirect long-run relationships and dynamic interactions between public investment (PI) and output performance in Nigeria using annual data spanning 1970-2010. A macro-econometric model derived from Keynes’ income-expenditure framework was employed. The model was disaggregated into demand and supply sides to trace the direct and indirect effects of PI on aggregate output. The direct supply side effect was assessed using the magnitude of PI multiplier coefficient, while the indirect effect of PI on the demand side was evaluated with marginal propensity to consume, accelerator coefficient and import multiplier. The results showed relatively less strong direct effect of PI on aggregate output, while the indirect effects were stronger with the import multiplier being the most pronounced. This is attributed to declining capital expenditure, poor implementation and low quality of PI projects due to widespread corruption. By and large, we concluded that PI ex...
Journal of Reviews on Global Economics, 2014
Over the years, substantial theoretical and empirical studies have been carried out on the trade ... more Over the years, substantial theoretical and empirical studies have been carried out on the trade opennessgovernment size nexus. While a strand of the literature reported positive linkage, the other suggests otherwise. This study contributes to the debate by examining this relationship for Nigeria using the bounds testing approach to cointegration within an ARDL framework proposed by . Empirical evidence reveals that government size measured by percentage share of total government expenditure in GDP and share (percent) of recurrent expenditure in GDP significantly affects trade openness in the long run but percentage share of capital expenditure in GDP as a measure of government size does not impact on trade openness in the long run. The results of the standard causality test corroborate these findings. However, the three measures of government size considered significantly affect trade openness in the short run. The major implication for our study therefore is that compensation hypothesis holds for Nigeria. Thus, the government need to continue to expand its expenditure in order to cushion the effect of increase in risk caused by rising trade openness.
This study evaluated the role of institutions in the management of public debt in Nigeria after t... more This study evaluated the role of institutions in the management of public debt in Nigeria after the exit from the Paris club in 2006. It utilized both the institutional and macroeconometric frameworks. The institutional framework was anchored on the Debt Management Office Act of 2003 and the Fiscal Responsibility Act 2007 in which the two Acts of Parliaments provided a rule-based management of the public debt. Thus, the institutional analysis determined if the transition from discretionary to a rule-based system had taken place while the macroeconometric framework account for the impacts of debt on the public sector financing of Nigeria. The study found that the country has not been able to transit from the discretionary to a rule-based fiscal system/operation since the exit from the Paris club. This is can be attributed to the non-strict adherence to the rules as contained in the Fiscal Responsibility Act of 2007. The constraints to institutional change may also be linked to the co...
This paper conducts an empirical investigation of the effect of remittances on economic developme... more This paper conducts an empirical investigation of the effect of remittances on economic development in Lesotho, with particular attention paid to the role financial development plays in affecting this relationship. We made use of the fully-modified OLS (FMOLS) estimation technique to examine the long run relationship between remittances and development, and this helped to control for potential endogeneity bias. The results of econometric estimations revealed that remittances have had a significant positive effect on development. Also, the results showed that financial development, when measured by broad money exerts a positive effect on development in Lesotho. When remittances were interacted with financial development, the results showed a significant coefficient. This result indicates that remittances act a buffer for alleviating credit constraints of households and also acts to ameliorate inefficiencies of the financial system on poor households.
The Iup Journal of Public Finance, Sep 25, 2012
This paper conducts an empirical investigation of the effect of remittances on economic developme... more This paper conducts an empirical investigation of the effect of remittances on economic development in Lesotho, with particular attention paid to the role financial development plays in affecting this relationship. We made use of the fully-modified OLS (FMOLS) estimation technique to examine the long run relationship between remittances and development, and this helped to control for potential endogeneity bias. The results of econometric estimations revealed that remittances have had a significant positive effect on development. Also, the results showed that financial development, when measured by broad money exerts a positive effect on development in Lesotho. When remittances were interacted with financial development, the results showed a significant coefficient. This result indicates that remittances act a buffer for alleviating credit constraints of households and also acts to ameliorate inefficiencies of the financial system on poor households.
This paper examines the determinants and sustainability of international reserves accumulation in... more This paper examines the determinants and sustainability of international reserves accumulation in Nigeria. An assessment of the short-and long-run relationship between international reserves and its driving factors between 1970 and 2010 is carried out with a view of determining its sustainability, given the need to save against future exigencies. It makes use of error correction mechanism and the bounds testing approach to co integration within an autoregressive distributed lag framework proposed by Pesaran et al. (2001). The empirical estimates reveal that variability of export earnings, and the one period lagged value of international reserves positively affect reserve holding in Nigeria while oil price negatively affect it in the long-run. The economic (GDP per capita) and environmental (CO 2 emission) measures of sustainable development also affect international reserves accumulation in the long-run. The striking result from this study is that oil price negatively affects reserve holding in the long-run but is positive in the short-run. The fi ndings suggest the need to diversify Nigeria's sources of external reserves accumulation towards more environmentally and economically sustainable activities such that the negative effects of volatile oil export earnings as well as crude oil extraction are minimized.
This study examines the long-run relationships and dynamic interactions between the government re... more This study examines the long-run relationships and dynamic interactions between the government revenues and expenditures in Nigeria over the period 1970 to 2008. The analytical technique of Autoregressive Distributed Lag (ARDL) bound test as proposed by Pesaran and Pesaran (1997); and Pesaran et. al. (2001) was exploited. From the results, it is evident that there is the existence of a long run relationship between government expenditures and revenues when government expenditure is made the dependent variable. When revenue was made the dependent variable, no evidence of a long run relationship was found. The tax-spend hypothesis was therefore confirmed. This is attributable perhaps to oil revenue dominance in Nigeria's government revenue profile and fiscal operations over time.
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Papers by Taofik M Ibrahim