Globalisation and Government Size in Nigeria: A Revisit of the Compensation Hypothesis

P. I. Nwosa and T. O. Akinbobola
Additional contact information
P. I. Nwosa: Federal University Oye-Ekiti, Ekiti
T. O. Akinbobola: Obafemi Awolowo University, Ile-Ife

Economic and Financial Review, 2020, vol. 58, issue 1

Abstract: The link between globalisation and government expenditure has remained contentious in the literature particularly from a disaggregated perspective. Hence, this study examines the compensation hypothesis by analysing the relationship between globalisation and government size in Nigeria for the period 1981 to 2018. Globalisation is proxied by trade and financial openness while government size is measured by final consumption expenditure by the general government (FCE), share of government expenditure on economic services (ECO), share of government expenditure on social and community services (SCS), and share of government expenditure on transfers (TRF). The study employed the error correction modelling technique and the results of the study support the validity of the compensation hypothesis for three models (FCE, SCS, and TRF) but not for the ECO model. The study concludes that the compensation hypothesis cannot be claimed to hold for the Nigerian economy using aggregate data but rather the validity of the compensation hypothesis is component specific with respect to government expenditure. Also, results of this study showed that the findings of previous studies based on aggregate data cannot be generalised for all the components of government expenditures

Keywords: Globalisation; Government Size; Financial Openness; Trade Openness; ECM; Nigeria; Economic Services; ECO; Compensation Hypothesis (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dc.cbn.gov.ng/cgi/viewcontent.cgi?article=1002&context=efr (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ava:cbnefr:v:58:y:2020:i:1:a:2:p:

Access Statistics for this article

More articles in Economic and Financial Review from Central Bank of Nigeria Contact information at EDIRC.
Bibliographic data for series maintained by Bishara Dogo ().