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The tax-spend nexus in Nigeria: Evidence from Nonlinear Causality

Author

Listed:
  • Olalekan Bashir Aworinde

    (Tai Solarin University of Education, Nigeria & University of Bath, UK.)

Abstract

The study investigates the linear and nonlinear causal linkages between the tax-spend nexus in Nigeria for the periods 1961-1992, 1993-2012 and1961-2012. Employing a nonparametric causality test of Diks and Panchenko (2006) as well as the parametric causality test using the VAR model, results show that there is evidence of uni-directional linear causality from government revenue to government expenditure in the first period and uni-directional nonlinear causality from government revenue to government expenditure in the second and third periods. However, the nonlinear causal relation evidence that government revenue Granger cause government expenditure disappears after the VAR filtering. The policy implication of this result is that government should intensify efforts to improve her revenue accompanied with appropriate fiscal expenditure reforms.

Suggested Citation

  • Olalekan Bashir Aworinde, 2013. "The tax-spend nexus in Nigeria: Evidence from Nonlinear Causality," Economics Bulletin, AccessEcon, vol. 33(4), pages 3117-3130.
    • Handle: RePEc:ebl:ecbull:eb-13-00775
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    References listed on IDEAS

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    Cited by:

    1. A. Phiri, 2019. "Asymmetries in the revenue–expenditure nexus: new evidence from South Africa," Empirical Economics, Springer, vol. 56(5), pages 1515-1547, May.
    2. Aminu, Alarudeen & Raifu, Isiaka Akande, 2018. "Dynamic Nexus between Government Revenues and Expenditures in Nigeria: Evidence from Asymmetric Causality and Cointegration Methods," MPRA Paper 97880, University Library of Munich, Germany.
    3. Olumuyiwa Ganiyu Yinusa & Olalekan Bashir Aworinde & Isiaq Olasunkanmi Oseni, 2017. "The Revenue-Expenditure Nexus in Nigeria: Assymetric Cointegration Approach," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 15(1), pages 47-61.

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    More about this item

    Keywords

    Expenditure; Revenue; nonlinear causality; Nigeria;
    All these keywords.

    JEL classification:

    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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