TITLE:
Fiscal Deficit Episode in Nigeria: What Is the Percentage of Error Correction between Public Revenue and Expenditure?
AUTHORS:
Dauda Gbolagade Adebisi, Olusola Joel Oyeleke
KEYWORDS:
Fiscal Deficit, Expenditure, Error Correction, Revenue
JOURNAL NAME:
Modern Economy,
Vol.11 No.2,
February
25,
2020
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. Augmented-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.