Exploring the Asymmetric Linkage between Commodity Prices and Fiscal Performance in Nigeria

Adeosun, Opeoluwa Adeniyi; Fagbemi, Fisayo

doi:10.18488/journal.29.2019.62.134.148

Cited by 4 publications

(2 citation statements)

References 34 publications

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“…All of this had effects that added up on oil economies and on growth in all its forms. Oil became a drug for many countries (Adeosun & Fagbemi, 2019). Every day, policymakers around the world keep an eye on the global energy markets.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Fiscal Policy on Oil Prices - The Case of Algeria During the Period From 1970 to 2022

Meziane

2024

Economics and Finance

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There is a consensus among experts in the field of economics that the wea economic performance of certain oil-exporting countries can be attributed to their approach in responding to fluctuations in petroleum prices. This is primarily due to the fact that in most of these countries, government expenditures are heavily reliant on revenues generated from the export of hydrocarbons. This research paper aims to examine the impact of petroleum price fluctuations on several macroeconomic indicators in Algeria from 1970 to 2022. These variables include the gross domestic product, petroleum price, currency rate, imports, and total income. The price of petroleum is regarded as the primary determinant of economic activity in Algeria. This may be demonstrated by the function of Batch responsiveness, which measures the responsiveness of variables to changes in petroleum prices.

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Section: Introductionmentioning

confidence: 99%

The Impact of Fiscal Policy on Oil Prices - The Case of Algeria During the Period From 1970 to 2022

Meziane

2024

Economics and Finance

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“…Liquidity-based indicators, triggered by low and volatile revenue mobilization, with interest payment accounting for three-fifths of federal revenue (IMF, 2019) further compound Nigeria's fiscal vulnerability and threaten its long term fiscal sustainability. As such, the government frontloading nonoil diversification effort is essential especially with empirical evidences (see Adeosun and Fagbemi, 2019) that oil price movements complicate fiscal performance and borrowing approach and inhibit debt sustainability. Although Nigeria is not listed as a beneficiary of the heavily indebted poor countries (HIPCs) and multilateral debt relief initiative (MDRI) program, the weak reaction of government to debt variations provides sufficient ground to examine the evolution of fiscal response and to elucidate the nature of its short- and long-term fiscal sustainability.…”

Section: Introductionmentioning

confidence: 99%

Policy asymmetries and fiscal sustainability: evidence from Nigeria

Adeosun

Ayodele

Jongbo

2021

AJEMS

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PurposeThis study examines and compares different specifications of the fiscal policy rule in the fiscal sustainability analysis of Nigeria.Design/methodology/approachThis is methodologically achieved by estimating the baseline constant-parameter and Markov regime switching fiscal models. The asymmetric autoregressive distributed lag fiscal model is also employed to substantiate the differential responses of fiscal authorities to public debt.FindingsThe baseline constant-parameter fiscal model provides mixed results of sustainable and unsustainable fiscal policy. The inconclusiveness is adduced to instability in primary fiscal balance–public debt dynamics. This makes it necessary to capture regime switches in the fiscal policy rule. The Markov switching estimations show a protracted fiscal unsustainable regime that is inconsistent with the intertemporal budget constraint (IBC). The no-Ponzi game and debt stabilizing results of the Markov switching fiscal model further revealed that the transversality and debt stability conditions were not satisfied. Additional findings from the asymmetric autoregressive model estimation show that fiscal consolidation responses vary with contraction and expansion in output and spending, coupled with downturns and upturns in public debt dynamics in both the long and short run. These findings thus confirm the presence of asymmetries in the fiscal policy authorities' reactions to public debt. Further, additional evidences show the violation of the IBC which is exacerbated by the deleterious effect of the pro-cyclical fiscal policy response in boom on the improvement of the primary fiscal balance.Originality/valueThis study deviates from the extant literature by accommodating time variation, periodic switches and fiscal policy asymmetries in the fiscal sustainability analysis of Nigeria.

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