Abstract
This study investigates the response of Nigeria's government balance to oil price dynamics. The Linear and Non-Linear Autoregressive Distributed Lag models are employed for analysis. The findings of the study reveal that while the long run response of government balance to oil price dynamics is symmetric, the short run response is asymmetric. In the long run, an increase in oil price improves the government's fiscal position, signifying an increase in fiscal effort. Interestingly, while positive oil price shocks lead to a short run worsening of the government's fiscal position, indicating poor fiscal efforts, negative oil price shocks influence an improvement of government fiscal efforts. Further, although the operationalisation of fiscal rules worsens the government's fiscal position in the short run, it has a beneficial long run effect. These findings have far-reaching policy implications.
Original language | English |
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Article number | 103353 |
Number of pages | 10 |
Journal | Resources Policy |
Volume | 81 |
Early online date | 20 Feb 2023 |
DOIs | |
Publication status | Published - 31 Mar 2023 |
Keywords
- Africa
- fiscal balance
- fiscal effort
- fiscal policy
- fiscal stance
- NARDL
- Nigeria
- oil price