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A Structural Break Analysis of Fiscal Deficit Process in Nigeria

Owolabi A. Usman () and Dauda Gbolagade Adebisi ()
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Owolabi A. Usman: Ladoke Akintola University of Technology
Dauda Gbolagade Adebisi: Bowen University

The Review of Black Political Economy, 2017, vol. 44, issue 3, 341-352

Abstract: Abstract The study examined the sustainability of fiscal policy process in Nigeria for the period 1961 to 2013, using ARDL cointegrating method between government revenue and government expenditure. The Bai-Perron multiple break point tests showed that there was structural shift in variables in 1981 which accounted for unsustainable fiscal deficit throughout the period. It was however, found that fiscal deficit before 1981(1961–1980) was weakly sustainable, while the estimation after 1981(1982–2013) indicated strong sustainability of fiscal policy in Nigeria. We therefore recommend that government should continue with the policies put in place by successive governments since 1982 to ensure stability of macroeconomics environment.

Keywords: Fiscal Deficit; Cointegration; Unit Roots; Structural Breaks (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:spr:blkpoe:v:44:y:2017:i:3:d:10.1007_s12114-017-9261-1