Impact of Fiscal Policy on Agricultural Output in Nigeria
Abstract
This study examines the impact of fiscal policy on agricultural output in Nigeria using the most recent official data. The metrics for fiscal policy is government capital expenditure and custom duties on fertilizer. The study used annual time series data obtained from CBN annual statistical bulletin, NCS, and FIRS which was found to be stationary at the order of I(1) and I(0). The order of unit root test led to the use of ARDL estimation method employed in the empirical analysis of this research work. The study found evidence of both short and long run relationship between the variables (VAO, GEX, IDMF, and ACGSF) using both Johansen co-integration and ARDL Bounds test. Although government expenditure (GEX) to agricultural sector was found to be statistically insignificant which recommend that government should increase agriculture capital expenditure to ensure that its contribution is significant. Consequently, custom duties on fertilizer (IDMF) was found to be negatively signed and significant indicating a negative impact on agricultural output. This demands that the policy makers should be prudent in the use of fiscal policy instrument in achieving its desired objective.
References
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[31] Nkoro, E., and Uko, A. K. 2016. Autoregressive Distributed Lag ( ARDL ) cointegration technique : application and interpretation, 5(4): 63–91.
[32] Ofoegbu, G. N., and Akwu, D. O. 2016. Empirical analysis of effect of tax revenue on economic development of Nigeria, International Journal of Asian Social Science, 6(10): 604–613. https://doi.org/10.18488/journal.1/2016.6.10/1.10.604.613
[33] Olasunkanmi, O. I. 2013. Fiscal Policy and Sectoral Output in Nigeria : A Multivariate Cointegration Approach, Journal of Economics and Development Studies1(2), 26–34.
[34] Onwe, O. J., and Ph, D. 2014. Impacts of Fiscal Policy Components on Economic Growth in Nigeria : An Empirical Trend Analysis, Kuwait Chapter of Arabian Journal of Business and Management Review 4(1), 1–19.
[35] Osuala, A. E., and Jones, E. 2014. Empirical Analysis of the Impact of Fiscal Policy on Economic Growth of Nigeria, International Journal of Economics and Finance, 6(6): 203–211. https://doi.org/10.5539/ijef.v6n6p203
[36] Sertoğlu, K., Ugural, S., and Bekun, F. V. 2017. The Contribution of Agricultural Sector on Economic Growth of Nigeria, International Journal of Economics and Financial 7(1): 547–552.
[37] Teles, V. K., and Mussolini, C. C. 2013. Author ’ s Accepted Manuscript Public Debt and the Limits of Fiscal Policy to Increase Economic Growth. European Economic Review. https://doi.org/10.1016/j.euroecorev.2013.11.003
[38] Tiezzi, S., and Xiao, E. 2016. Time delay , complexity and support for taxation. Journal of Environmental Economics and Management, 77: 117–141. https://doi.org/10.1016/j.jeem.2016.03.002
[39] Udah, S. C., Nwachukwu, I. N., Nwosu, A. C., Mbanasor, J. A., and Akpan, S. B. 2015. Analysis of Contribution of Various Agricultural Subsectors to Growth in Nigeria Agricultural Sector, International Journal of Agriculture, Forestry and Fisheries, 3(3): 80–86.
[40] Ugwuanyi, U. B., and Ugwunta, O. D. 2017. Fiscal Policy and Economic Growth : An Examination of Selected Countries in Sub-Saharan Africa, International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(1): 117–130. https://doi.org/10.6007/IJARAFMS/v7-i1/2587
[2] Asaleye, A. J., Popoola, O., Lawal, A. I., Ogundipe, A. & Ezenwoke, O. (2018). The credit channels of monetary policy transimmission: Implications on output and employment in Nigeria. Banks and Bank Systems, 13, 103-118
[3] Audu, N. P. 2012. The Impact of Fiscal Policy on the Nigerian Economy, 4(1): 142–150.
[4[ Ayopo, B. A., Isola, L. A. & Olukayode, S. R. (2016a). Stock market response to economic growth and interest rate volatility: Evidence from Nigeria. International Journal of Economics and Financial Issues 6(1), 354-360
[5] Ayopo, B. A., Isola, L. A. & Olukayode, S. R. (2016b). Stock market volatility: Does our fundamentals matter? Ikonomicheski Izsledvania 25(3), 33-42
[6] Ayopo, B. A., Isola, L. A., and Olukayode, S. R. (2015). Monetary policy dynamics and the stock market movements: empirical evidence from Nigeria. Journal of Applied Economic Sciences, 10(8), 1179–1188.
[7] Baharumshah, A. Z., Soon, S., and Lau, E. 2016. Fiscal sustainability in an emerging market economy: When does public debt turn bad? Journal of Policy Modeling. https://doi.org/10.1016/j.jpolmod.2016.11.002
[8] Bouakez, H. 2009. Measuring the Effects of Fiscal Policy ∗, (January).
[9] Brzozowski, M., and Siwi, J. 2010. THE IMPACT OF FISCAL RULES ON FISCAL POLICY VOLATILITY nska-Gorzelak I . Introduction, XIII(2): 205–231. https://doi.org/10.1016/S1514-0326(10)60010-4
[10] Castro, V. 2011. The impact of the European Union fiscal rules on economic growth. Journal of Macroeconomics, 33(2): 313–326. https://doi.org/10.1016/j.jmacro.2010.09.003
[11] Edgeworth, F. Y. 1897. The Pure Theory of Taxation. The Economic Journal, 7(25): 46–70. https://doi.org/10.2307/2956958
[12] Ehinomen, C., and Charles, A. C. 2012. The Impact of Monetary Policy on Agricultural Development In, 5(5): 13–25.
[13] Isola, L. A., Frank, A. & Leke, B. K. (2015). Can Nigeria achieve Millennium Development Goals? Journal of Social Sciences Research, 1(6), 72-78
[14] Fankun, D. S., and Evbuomwan, G. O. 2017. An Evaluation of Agricultural Financing, Policies and Initiatives for Sustainable Development in Nigeria, In the 21 st Century, 8(3): 32–38. https://doi.org/10.9790/5933-0803033238
[15] Fashina, O. A., Asaleye, A. J., Ogunjobi, J. O., and Lawal, A. I. 2018. Foreign aid, human capital and economic growth nexus: Evidence from Nigeria. Journal of International Studies, 11(2): 104–117. https://doi.org/10.14254/2071-8330.2018/11-2/8
[16] Fölster, S., and Henrekson, M. 2006. Growth effects of government expenditure and taxation in rich countries: A reply. European Economic Review, 50(1): 219–221. https://doi.org/10.1016/j.euroecorev.2005.02.007
[17] Gerritsen, A. 2016. AC SC Optimal taxation when people. Journal of Public Economics. https://doi.org/10.1016/j.jpubeco.2016.10.006
[18] Ghate, C., Gopalakrishnan, P., and Tarafdar, S. 2016. The Journal of Economic Asymmetries Fiscal policy in an emerging market business cycle model. The Journal of Economic Asymmetries. https://doi.org/10.1016/j.jeca.2016.07.004
[19] Grazia, M., and Klemm, A. 2016. The growth impact of discretionary fiscal policy measures R. Journal of Macroeconomics, 49: 265–279. https://doi.org/10.1016/j.jmacro.2016.08.004
[20] Hague, T. 2016. European Journal of Political Economy Electoral systems and fi scal policy outcomes : Evidence from, (November 2014). https://doi.org/10.1016/j.ejpoleco.2016.12.004
[21] Izuchukwu, O. 2011. World Review of Business Research Analysis of the Contribution of Agricultural Sector on the Nigerian Economic Development Izuchukwu, 1(1): 191–200.
[22] Kuismanen, M., and Kämppi, V. 2010. The effects of fi scal policy on economic activity in Finland. Economic Modelling, 27(5): 1315–1323. https://doi.org/10.1016/j.econmod.2010.01.010
[23] Lawal, A. I., Asaleye, A.J., IseOlorunkanmi, J. and Popoola, O. R. 2018. Economic growth, agricultural output and tourism development in Nigeria: An application of the ARDL bound testing approach. Journal of Environmental Management and Tourism, 28(4).
[24] Lawal, A. I., Nwanji, T. I., Oye O. O., and Adama, I. J. 2018. Can corporate governance mechanisms deter earnings management? Evidence from firms listed on the Nigerian Stock Exchange. AESTIMATIO, The IEB International Journal of Finance, Forthcomin.
[25] Lawal, A. I., Nwanji T. I, Adama, J. I and Otekunrin, A. O. 2017. Examining the Nigerian stock market efficiency: Empirical evidence from wavelet unit root test approach. Journal of Applied Economic Sciences, Forthcomin.
[26] Lawal, A. I., Oye, O. O., Toro J. and Fashina, O. A. 2018. Taxation and sustainable economic growth: empirical evidence from Nigeria. In P. P. Sengupta (Ed.), Contemporary Issues on Globalization and Sustainable Development (Volume 1, pp. 121–144). New Delhi: Serials.
[27] Lawal, A. I., Somoye, R. O. C. and B. A. A. 2017. Are African stock markets efficient? Evidence from wavelet unit root test for random walk. Economic Bulletin, 37(4): 1–16.
[28] Lawal, A. I., Babajide, A. A., Nwanji, T. I., and Eluyela, D. 2018. Are Oil Prices Mean Reverting ? Evidence from Unit Root Tests with Sharp and Smooth Breaks, 8(6): 292–298.
[29] Lawal, A. I., Nwanji, T. I., Asaleye, A., and Ahmed, V. 2016. Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach. Cogent Economics & Finance, 4(1): 1–15. https://doi.org/10.1080/23322039.2016.1258810
[30] Maku, O. E. 2015. Fiscal Policy and Economic Growth : A Study on Nigerian Economic Perspective, 6(15): 86–93.
[31] Nkoro, E., and Uko, A. K. 2016. Autoregressive Distributed Lag ( ARDL ) cointegration technique : application and interpretation, 5(4): 63–91.
[32] Ofoegbu, G. N., and Akwu, D. O. 2016. Empirical analysis of effect of tax revenue on economic development of Nigeria, International Journal of Asian Social Science, 6(10): 604–613. https://doi.org/10.18488/journal.1/2016.6.10/1.10.604.613
[33] Olasunkanmi, O. I. 2013. Fiscal Policy and Sectoral Output in Nigeria : A Multivariate Cointegration Approach, Journal of Economics and Development Studies1(2), 26–34.
[34] Onwe, O. J., and Ph, D. 2014. Impacts of Fiscal Policy Components on Economic Growth in Nigeria : An Empirical Trend Analysis, Kuwait Chapter of Arabian Journal of Business and Management Review 4(1), 1–19.
[35] Osuala, A. E., and Jones, E. 2014. Empirical Analysis of the Impact of Fiscal Policy on Economic Growth of Nigeria, International Journal of Economics and Finance, 6(6): 203–211. https://doi.org/10.5539/ijef.v6n6p203
[36] Sertoğlu, K., Ugural, S., and Bekun, F. V. 2017. The Contribution of Agricultural Sector on Economic Growth of Nigeria, International Journal of Economics and Financial 7(1): 547–552.
[37] Teles, V. K., and Mussolini, C. C. 2013. Author ’ s Accepted Manuscript Public Debt and the Limits of Fiscal Policy to Increase Economic Growth. European Economic Review. https://doi.org/10.1016/j.euroecorev.2013.11.003
[38] Tiezzi, S., and Xiao, E. 2016. Time delay , complexity and support for taxation. Journal of Environmental Economics and Management, 77: 117–141. https://doi.org/10.1016/j.jeem.2016.03.002
[39] Udah, S. C., Nwachukwu, I. N., Nwosu, A. C., Mbanasor, J. A., and Akpan, S. B. 2015. Analysis of Contribution of Various Agricultural Subsectors to Growth in Nigeria Agricultural Sector, International Journal of Agriculture, Forestry and Fisheries, 3(3): 80–86.
[40] Ugwuanyi, U. B., and Ugwunta, O. D. 2017. Fiscal Policy and Economic Growth : An Examination of Selected Countries in Sub-Saharan Africa, International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(1): 117–130. https://doi.org/10.6007/IJARAFMS/v7-i1/2587
Published
2019-03-03
How to Cite
LAWAL, Adedoyin Isola et al.
Impact of Fiscal Policy on Agricultural Output in Nigeria.
Journal of Environmental Management and Tourism, [S.l.], v. 9, n. 7, p. 1428-1442, mar. 2019.
ISSN 2068-7729.
Available at: <https://journals.aserspublishing.eu/jemt/article/view/2737>. Date accessed: 08 nov. 2024.
doi: https://doi.org/10.14505//jemt.v9.7(31).08.
Section
Article
Copyright© 2024 The Author(s). Published by ASERS Publishing 2024. This is an open access article distributed under the terms of CC-BY 4.0 license.