IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v7y2023i8p887-901.html
   My bibliography  Save this article

Fiscal Imbalances, Economic Growth and Macroeconomic Stability in Nigeria

Author

Listed:
  • Godwin Essang Esu,(PhD)

    (Department of Economics, University of Uyo, Uyo, Akwa Ibom State, Nigeria.)

Abstract

The study was undertaken to assess the interaction between fiscal imbalances, economic growth and macroeconomic stability in Nigeria, with emphasis on its impact on output growth, economic stability as well as its joint effect on the two frontline dependent variables – economic growth and macroeconomic stability. Amongst other techniques of analysis, the Dynamic Ordinary Least Squares (DOLS) was deployed for its features as one of the very unique cointegration techniques with special properties to take care of data-related issues, outliers and other encumbrances in the course of analysis. Employing data from secondary sources [CBN – Statistical Bulletin and World Bank’s World Development Indicators, all various years] to proximate and test fiscal imbalance, economic growth, macroeconomic stability and other controls, analyses were carried out, results obtained and findings, amongst others, was that fiscal imbalances in the Nigerian economy would stifle economic growth and deter macroeconomic stability. Factors like increasing debt volume, current account imbalances, high consumption expenditures, low total revenue, jumping inflation rate and exchange rate and very low productivity were seen as fuelling the outcome. The study recommended that tackling adequate adjustments in those macroeconomic indicators, which will close fiscal imbalance gaps as much as possible, may reverse the outcome, ceteris paribus.

Suggested Citation

  • Godwin Essang Esu,(PhD), 2023. "Fiscal Imbalances, Economic Growth and Macroeconomic Stability in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(8), pages 887-901, August.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:8:p:887-901
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-7-issue-8/887-901.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/journals/ijriss/articles/fiscal-imbalances-economic-growth-and-macroeconomic-stability-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michael Woodford, 1998. "Doing Without Money: Controlling Inflation in a Post-Monetary World," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 173-219, January.
    2. Goohoon Kwon & Lavern McFarlane & Wayne Robinson, 2006. "Public Debt, Money Supply, and Inflation: A Cross-Country Study and Its Application to Jamaica," IMF Working Papers 2006/121, International Monetary Fund.
    3. Benjamin Ayodele Folorunso, 2013. "Relationship between Fiscal Deficit and Public Debt in Nigeria: an Error Correction Approach," Journal of Economics and Behavioral Studies, AMH International, vol. 5(6), pages 346-355.
    4. Woodford, Michael, 1994. "Monetary Policy and Price Level Determinacy in a Cash-in-Advance Economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(3), pages 345-380.
    5. Andreas Nastansky & Alexander Mehnert & Hans Gerhard Strohe, 2014. "A Vector Error Correction Model for the Relationship between Public Debt and Inflation in Germany," Statistische Diskussionsbeiträge 51, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
    6. Catao, Luis A.V. & Terrones, Marco E., 2005. "Fiscal deficits and inflation," Journal of Monetary Economics, Elsevier, vol. 52(3), pages 529-554, April.
    7. Michael Woodford, 1998. "Control of the Public Debt: A Requirement for Price Stability?," International Economic Association Series, in: Guillermo Calvo & Mervyn King (ed.), The Debt Burden and its Consequences for Monetary Policy, chapter 5, pages 117-158, Palgrave Macmillan.
    8. Michael Wickens, 2008. "Asset Pricing and Macroeconomics, from Macroeconomic Theory: A Dynamic General Equilibrium Approach," Introductory Chapters, in: Macroeconomic Theory: A Dynamic General Equilibrium Approach, Princeton University Press.
    9. Woodford, Michael, 2001. "Fiscal Requirements for Price Stability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(3), pages 669-728, August.
    10. Jens Hilscher & Alon Raviv & Ricardo Reis, 2022. "Inflating Away the Public Debt? An Empirical Assessment," The Review of Financial Studies, Society for Financial Studies, vol. 35(3), pages 1553-1595.
    11. Michael Wickens, 2008. "The Centralized Economy, from Macroeconomic Theory: A Dynamic General Equilibrium Approach," Introductory Chapters, in: Macroeconomic Theory: A Dynamic General Equilibrium Approach, Princeton University Press.
    12. Michael Wickens, 2008. "Imperfectly Flexible Prices, from Macroeconomic Theory: A Dynamic General Equilibrium Approach," Introductory Chapters, in: Macroeconomic Theory: A Dynamic General Equilibrium Approach, Princeton University Press.
    13. José Augusto Lopes da Veiga & Alexandra Ferreira-Lopes & Tiago Neves Sequeira, 2016. "Public Debt, Economic Growth and Inflation in African Economies," South African Journal of Economics, Economic Society of South Africa, vol. 84(2), pages 294-322, June.
    14. Menbere Workie Tiruneh, 2004. "An Empirical Investigation Into the Determinants of External Indebtedness," Prague Economic Papers, Prague University of Economics and Business, vol. 2004(3), pages 261-277.
    15. Majid Taghavi, 2000. "Debt, growth and inflation in large European economies: a vector auto-regression analysis," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 159-173.
    16. BILDIRICI, Melike & ERSIN, Ozgur Omer, 2007. "Domestic Debt, Inflation And Economic Crises: A Panel Cointegration Application To Emerging And Developed Economies," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(1).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aimola, Akingbade U & Odhiambo, Nicholas M, 2021. "Public debt and inflation: Empirical evidence from Ghana," Working Papers 27063, University of South Africa, Department of Economics.
    2. Akingbade U. Aimola & Nicholas M. Odhiambo, "undated". "Public Debt and Inflation: Empirical Evidence from Ghana," Working Papers AESRIWP06, African Economic and Social Research Institute (AESRI).
    3. Akingbade U. Aimola & Nicholas M. Odhiambo & Christian Nsiah, 2021. "Public debt and inflation nexus in Nigeria: An ARDL bounds test approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1921905-192, January.
    4. Akingbade U. Aimola & Nicholas M. Odhiambo & Christian Nsiah, 2021. "Public debt and inflation nexus in Nigeria: An ARDL bounds test approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1921905-192, January.
    5. Aimola Akingbade U. & Odhiambo Nicholas M., 2022. "Is the effect of public debt on inflation symmetric or asymmetric? Evidence from the Gambia," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 8(1), pages 41-57, June.
    6. Nguyen Van Bon, 2015. "The relationship between public debt and inflation in developing countries: Empirical evidence based on difference panel GMM," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 5(9), pages 128-142, September.
    7. Buiter, Willem H. & Sibert, Anne C., 2018. "The fallacy of the fiscal theory of the price level: One last time," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-56.
    8. Pesenti, Amos, 2016. "The meaning of monetary stability," FSES Working Papers 475, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    9. Aimola Akingbade U. & Odhiambo Nicholas M., 2020. "Public Debt and Inflation: A Review of International Literature," Folia Oeconomica Stetinensia, Sciendo, vol. 20(1), pages 9-24, June.
    10. Esat Durguti & Nexhat Kryeziu & Emine Gashi, 2020. "How Does the Budget Deficit Affect Inflation Rate-Evidence from Western Balkans," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(1), pages 01-10, January.
    11. António Afonso, 2002. "Disturbing the Fiscal Theory of the Price Level: Can it Fit the EU-15," Working Papers Department of Economics 2002/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    12. Creel, Jerome & Bihan, Herve Le, 2006. "Using structural balance data to test the fiscal theory of the price level: Some international evidence," Journal of Macroeconomics, Elsevier, vol. 28(2), pages 338-360, June.
    13. Marco Bassetto, 2002. "A Game-Theoretic View of the Fiscal Theory of the Price Level," Econometrica, Econometric Society, vol. 70(6), pages 2167-2195, November.
    14. Lin, Hsin-Yi & Chu, Hao-Pang, 2013. "Are fiscal deficits inflationary?," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 214-233.
    15. Daniel, Betty C. & Shiamptanis, Christos, 2012. "Fiscal risk in a monetary union," European Economic Review, Elsevier, vol. 56(6), pages 1289-1309.
    16. Fan, Jingwen & Minford, Patrick & Ou, Zhirong, 2013. "The Fiscal Theory of the Price Level - identification and testing for the UK in the 1970s," Cardiff Economics Working Papers E2013/12, Cardiff University, Cardiff Business School, Economics Section.
    17. DJINKPO, Medard, 2019. "A DSGE model for Fiscal Policy Analysis in The Gambia," MPRA Paper 97874, University Library of Munich, Germany, revised 30 Dec 2019.
    18. Stephanie Schmitt-Grohe & Jess Benhabib & Martin Uribe, 2001. "Monetary Policy and Multiple Equilibria," American Economic Review, American Economic Association, vol. 91(1), pages 167-186, March.
    19. Bajo-Rubio, Oscar & Díaz-Roldán, Carmen & Esteve, Vicente, 2009. "Deficit sustainability and inflation in EMU: An analysis from the Fiscal Theory of the Price Level," European Journal of Political Economy, Elsevier, vol. 25(4), pages 525-539, December.
    20. Pedro Garcia Duarte, 2015. "From real business cycle and new Keynesian to DSGE Macroeconomics: facts and models in the emergence of a consensus," Working Papers, Department of Economics 2015_05, University of São Paulo (FEA-USP).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:7:y:2023:i:8:p:887-901. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.