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

Olalekan Aworinde ()

Economics Bulletin, 2013, vol. 33, issue 4, 3117-3130

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.

Keywords: Expenditure; Revenue; nonlinear causality; Nigeria (search for similar items in EconPapers)
JEL-codes: E6 H6 (search for similar items in EconPapers)
Date: 2013-12-30
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