Response of fiscal efforts to oil price dynamics

Attahir Babaji Abubakar*, Mansur Muhammad, Samuel Mensah

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
10 Downloads (Pure)

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 languageEnglish
Article number103353
Number of pages10
JournalResources Policy
Volume81
Early online date20 Feb 2023
DOIs
Publication statusPublished - 31 Mar 2023

Keywords

  • Africa
  • fiscal balance
  • fiscal effort
  • fiscal policy
  • fiscal stance
  • NARDL
  • Nigeria
  • oil price

Fingerprint

Dive into the research topics of 'Response of fiscal efforts to oil price dynamics'. Together they form a unique fingerprint.

Cite this