Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/317204 
Year of Publication: 
2022
Citation: 
[Journal:] Organizations and Markets in Emerging Economies [ISSN:] 2345-0037 [Volume:] 13 [Issue:] 1 [Year:] 2022 [Pages:] 163-182
Publisher: 
Vilnius University Press, Vilnius
Abstract: 
This study employs the bootstrap autoregressive distributed lag (ARDL) approach alongside the dynamic ARDL simulations technique to investigate the non-linear effect of public debt on public expenditure in Nigeria during the 1981-2020 period. The result of the bootstrap bounds test illustrates the presence of a long-term relationship between public expenditure and public debt (along with oil rents, output growth and urbanisation). Further, the estimation results indicate that the effect of public debt on public expenditure is non-linear. In particular, public expenditure increases at early stages of rising public debt but declines at latter phases when public debt grows beyond specific threshold. This empirical outcome is further validated by the dynamic ARDL simulations approach which shows a significant decline in predicted public expenditure after short-term expansion due to counterfactual shock in public debt. Thus, policies which diversify public revenue from oil production and a reversal of the rising trend in public debt are recommended to avert the adverse welfare implications of declining public expenditure.
Subjects: 
public expenditure
public debt
bootstrap ARDL
dynamic ARDL simulations
Nigeria
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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