AN INVESTIGATION OF CAUSAL RELATIONSHIPS BETWEEN GOVERNMENT REVENUE AND EXPENDITURE IN NIGERIA, USING ENGLE COINTEGRATION APPROACH

Authors

  • Hussaini Abubakar
    Hussaini Adamu Federal Polytechnic, Kazaure, Jigawa State
  • M. Usman
  • J . Y. Falgore
  • S. S. Sani
  • I. Abubakar
  • K. Adamu

Keywords:

Data, long-run, short-run, variables, deficit

Abstract

This paper investigated the direction of causal relation between Government Revenue and Expenditure in Nigeria using annual data from 1981 to 2020. To validate the existence of long-run and short-run relationships and short-run dynamics of the variables, an Engle Cointegration was employed to test for cointegration and estimate error correction. The hypotheses were examined using the Engle-Granger approach to cointegration. The models' empirical results show that there is bidirectional causality between government revenue and expenditures in Nigeria. This indicates that the government's revenue and expenditure decisions are decided jointly by the country's fiscal authorities. The findings point to the existence of a revenue-to-expenditure feedback system in Nigeria. In other words, both revenue and expenditure levels, affect each other in the Nigerian budgeting process. Therefore, greater tax levels are driven by higher spending levels, and vice versa. This paper recommends that Nigerian fiscal authorities with budget deficits should simultaneously increase revenues and cut expenditure in order to control their deficits

Dimensions

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Published

28-01-2022

How to Cite

AN INVESTIGATION OF CAUSAL RELATIONSHIPS BETWEEN GOVERNMENT REVENUE AND EXPENDITURE IN NIGERIA, USING ENGLE COINTEGRATION APPROACH. (2022). FUDMA JOURNAL OF SCIENCES, 5(4), 222-228. https://doi.org/10.33003/fjs-2021-0504-695

Issue

Vol. 5 No. 4 (2021): FUDMA Journal of Sciences - Vol. 5 No. 4

Section

Research Articles
Copyright & Licensing

FUDMA Journal of Sciences

How to Cite

AN INVESTIGATION OF CAUSAL RELATIONSHIPS BETWEEN GOVERNMENT REVENUE AND EXPENDITURE IN NIGERIA, USING ENGLE COINTEGRATION APPROACH. (2022). FUDMA JOURNAL OF SCIENCES, 5(4), 222-228. https://doi.org/10.33003/fjs-2021-0504-695

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