Fiscal Deficit Episode in Nigeria: What Is the Percentage of Error Correction between Public Revenue and Expenditure?
- 1 Department of Accounting and Finance, Bowen University, Iwo, Nigeria
- 2 Department of Economics, Redeemer’s University, Ede, Nigeria
Abstract
In the last three decades, almost every year except 1995 and 1996 respectively, fiscal operations of government in Nigeria have been ended in deficits. This paper determines the percentage of error correction between government revenue and expenditure in Nigeria from 1980-2018. Secondary data sourced from Central Bank of Nigeria, 2018, are analysed. Augment e d-Dicky-Fuller (ADF) unit root test is used to examine the properties of the variables. Using Engel-Granger 2-step procedure to assess cointegration, error correction technique of estimation employed provides interesting results. The findings reveal that it takes two years and five months, approximately 42% as speed of adjustment, for the variables to be at equilibrium, the development that makes fiscal deficit inevitable in Nigerian economy. To widen the scope of revenue generation, it is, therefore, pertinent for authorities to ensure that investments are undertaken to close the gap between revenue and expenditure within the shortest time possible.
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