Determinants of fiscal policy behavior in Nigeria

Abstract

The study investigated the factors that determine fiscal behavior in Nigeria. The vulnerability of fiscal policy framework in Nigeria to different shocks and the attendant effects on the behavior of fiscal policy are parts of the reasons that prompted this research work. Annual data between 1980 and 2015 on core fiscal variables such as government revenue, government expenditure, fiscal balance, public debt, as well as other variables such as oil price, exchange rate, and inflation rate commodity price among others, are used. The Auto-Regressive Distributed Lag ARDL estimating technique is used to analyze both the long-run and short-run effects of these variables on fiscal behavior in Nigeria. Findings from the study show that fiscal policy in Nigeria is highly vulnerable to shocks from these variables mostly in the short run. Notwithstanding, variables like government revenue, government expenditure, regime of administration, oil price and commodity price volatilities all have sustained effects till the long-run periods. It was discovered that oil price movements is not the only external factor that has pronounced effects on fiscal behavior, but commodity prices volatility generally constitutes an important influential factor in determination of fiscal policy behavior in Nigeria.

Aligning public financial management system and free healthcare policies: lessons from a free maternal and child healthcare programme in Nigeria

“…The findings showed that financing of FMCHP was insufficient and unpredictable. Consistent with experiences in Senegal [16], the level of promised funds remained unchanged since inception despite increases in population of target beneficiaries and changes in the unit cost of services and drugs due to rising inflation rates [33]. Changes in target population and increase in inflation rates imply underfunding of the scheme even if government transferred fully the existing budget commitment to the programme.…”

“…Changes in target population and increase in inflation rates imply underfunding of the scheme even if government transferred fully the existing budget commitment to the programme. Inflation rate affects fiscal policy behaviour in Nigeria [33], and may explain the weak compliance with contribution rules by SLG. Besides evidence of state governments’ defaulting in their contributions to UHC schemes in Nigeria and Mexico [17–19], other studies also found poor government commitment to funding UHC schemes consistent with findings of this study [15, 19].…”