Fiscal Operations Research Articles

Impact of Tax Revenue on Income Inequality and Poverty in Nigeria

This study is on the impact of tax revenue on income inequality and poverty in Nigeria from 1995 to 2022, variables used are total tax revenue as the independent variable, poverty rate and income inequality proxy by Gini coefficient as dependent variables. Multiple taxation, corruption, value added tax, policy failures and inefficient fiscal operations are identified by this study as contributive factors to income inequality and poverty in Nigeria. The findings revealed that the relationship between total tax revenue and poverty rate is positive (as against apriori expectations). The estimated results are R2 at 0.626243 and adjusted R2 0.588253 which are the coefficient of determination or explainability of the independent variable (TTR) for the dependent variable (GIN), 63% of the changes in the dependent variable (GIN) is caused by changes in (TTR). The study concluded that tax revenue has a significant positive impact on poverty rate and income inequality in Nigeria. Major recommendations are that the Ministry of Finance, the Federal Inland Revenue Service (FIRS) the state board of Internal Revenue Service, the Joint Tax Board (JTB) should improve the dividend of taxation through accountability, transparency, better revenue generation and tax revenue expenditure on infrastructure and basic services.

Preliminary Exploration of the Monetization of Land Tax in the Mid-Ming Dynasty's Western Shandong Region from an HGIS Perspective

Transportation and retention are among the most important elements of the fiscal system during the Ming Dynasty, categorized as types of tax allocations used in the collection of the land tax, reflecting the fiscal relations between central and local governments. Thus, transportation and retention are central to the fiscal operations of the Ming Dynasty. This paper compiles fiscal data from the Western Shandong Region during the Ming Dynasty and discusses the transportation, retention, and the monetization issues of the land tax during the Wanli Reform. Using Geographic Information Systems, the spatial visualization of the traditional and new land tax transportation quotas was performed, revealing that the new tax regime is heavily constrained by the original quotas.

Where Are Business Incubators Built? County-Level Spatial Distribution and Rationales Based on the Big Data of Chinese Yangtze River Delta Region

Business incubators (BIs) in China have predominantly exhibited a government-led characteristic, recently broadening their spatial and temporal scope and extending reach to the county level. Regarding the inadequacies of county-level analysis scale, this study leverages Points of Interest (POI) big data to overcome them. To comprehend the governmental rationale in the construction of BIs, we examine the evolution dynamics of BIs in conjunction with policies. An economic geography framework is developed, conceptualizing BIs as quasi-public goods and productive services, and incorporating considerations of county-level fiscal operations and industrial structures. Focusing on the Yangtze River Delta (YRD) region as a case study, our findings reveal that over 98% of County Administrative Units (CAUs) have built BIs. Using kernel density estimation and Moran’s I, the spatial patterns of CAUs are identified. The CAUs are further classified into three categories of economic levels using the k-means algorithm, uncovering differentiated relationships between industry, finance, and their respective BI. Additionally, we analyze the density relationship between BIs and other facilities at a micro-level, showcasing various site selection rationales. The discussions highlight that while BIs tend to align with wealthier areas and advanced industries, affluent CAUs offer location advantages on BIs, whereas less wealthy CAUs prioritize quantity for political achievements. This paper concludes with recommendations about aligning BIs based on conditions and outlooks on future research.

Forecasting the future: applying Bayesian model averaging for exchange rates drivers in Ghana

ABSTRACT Exchange rate forecasts and stability have been a challenge for developing economies. This study analyses the possible exchange rate predictors in Ghana that are needed for policymaking. We perform an out-of-sample exchange rate forecast for the Ghana Cedis (GHS) per the United States dollar (USD) and the Euro (EUR) and the nominal effective exchange rate (NEER) using the Bayesian model averaging for 1, 3 and 6-month horizons. We observed that domestic predictors largely drive the exchange rates in Ghana with the stock market index and fiscal operations exhibiting the strongest predictive power followed by the Taylor rule, and the real economic sector. Moreover, there is an international spillover from the US economy to Ghana’s exchange rate. Finally, we noticed that forecast accuracy improved at the 3-month-ahead.

Finances of the Nation: From Bonds to Banknotes—Central Banking and Public Finances in Canada

This article presents a summary of the Bank of Canada's finances from 1935 to the present, highlighting the interplay between the central bank and the federal government's fiscal operations. It explores the historical, political, and economic factors that led to the establishment and subsequent nationalization of the Bank of Canada. It also presents new data and analysis on the central bank's impact on Canadian public finances. By examining the evolution of the Bank of Canada's balance sheet, revenue streams, and expenditures, the article underscores the importance of understanding these connections, particularly considering the COVID-19 pandemic and the subsequent implementation of quantitative easing. Understanding the financial position of the Bank of Canada separately from the broader consolidated position of the government of Canada is valuable. For example, it allows one to construct a broader measure of federal debt service costs, which today are materially larger than what is reported in the public accounts. It may also clarify the implications of monetary policy choices for the economic and financial welfare of the nation.

Budget Deficit and Economic Growth in Nigeria: A Further Assessment

As revenue under-performs while the debt profile keeps increasing, the government of Nigeria targets fiscal viability through appropriation. However, in response to various fiscal operations regarding the deficit and the growth in the country, several studies have examined the relationship and come up with divergent findings. On this premise, and while building on previous effort, the objective of this paper is to assess the effect of budget deficit on economic growth over the period 1981-2021 in Nigeria. On the assumption that the economic growth is influenced by other factors aside the main sources of budget deficit, the individual average effect of FDI, ODA, and the public investment was also examined. The pre-estimation diagnostics used the ADF, PP, KPSS method, as well as, Bai-Perron multiple structural break methodology. Moreover, following the unit-root results, the ARDL technique was employed for model estimation. Consequently, whereas a two-way causal relation was established between the economic growth and FDI, a one-way causality was rather found to run from each of budget deficit, ODA, and a public investment to economic growth. Furthermore, the analyses revealed that public investment positively affects the economic growth in both short- and long-run while the budget deficit positively affects in the short-run as against negatively in the long-run. Thus, the government is advised to intensify efforts at boosting public investment to help augment economic growth as the budget deficit is negatively effective in the long-run.

Efficiency of subnational government expenditure towards elementary education and nutrition: Bootstrap data envelopment analysis for India

The need of translating increasing outlays into better outcomes on various public programmes has attracted the attention of researchers worldwide to focus more on the quality of public spending, often assessed in terms of its efficiency. The present article is a contribution to the existing literature on the subject in that it assesses the efficiency of government expenditure of Indian states for two most basic social services—elementary education and nutrition during 2014–2015 and 2018–2019 using data envelopment analysis and Malmquist productivity index techniques, in both input‐oriented as well as output‐oriented settings under variable returns to scale assumption; it constructs the average performance index for children at elementary education and malnutrition index for women and children to utilise them as output indicators; and it adopts a robust bootstrap truncated regression procedure to avoid various econometric issues while estimating the impact of selected environmental factors on bias‐corrected inefficiency scores. The major findings of this article seem to suggest that, while states should be provided greater flexibility in their fiscal operations, they have to complement their fiscal autonomy with good governance to improve the efficiency of their spending on basic social services. Towards this end, states like Bihar, Jharkhand and those belonging to North‐Eastern and Himalayan regions need special attention with a different set of development policies.

On separation of monetary and fiscal operations in macroeconomics statistics

Abstract The aim of the paper is to discuss one of the major topical and controversial issues in contemporary statistics, which is the separation of monetary and fiscal operations in national accounts. This issue revolves mainly around the operation of public financial institutions mandated to carry out monetary as well as fiscal transactions on behalf of governments. After discussing the methodological dimension of the point at issue, the paper numerically demonstrates the impact on final figures given the existing data constraints. Admittedly, substantial changes to the current recporting may modify the aggregates utilized in the analysis of the fiscal sustainability or the economic role of the government as such. The paper demonstrates that the statistical uncertainty about the size of the government sector is a fundamental issue. The impact on the level of government indebtedness may reach up to tens of percentage points.

조선 태종대 경상 · 전라도 조운제 정비의 재정사적 고찰

Since Joun system(漕運) was a very important system in the traditional era, in terms of the maintenance and operation of the state, many studies have been conducted accordingly. However no research has been done on the correlation with national fiscal policies. This study examines how the reform of Joun system was implemented in the context of financial history.<BR> The fiscal policy during the reign of Taejong(太宗) in Joseon Dynasty was aimed at securing national rice, so it was an important task to transport rice to Seoul from Gyeongsang(慶尙) and Jeolla(全羅) provinces which had the largest population and arable lands. However, rice taxation and the operation of Joun system planned by King Taejong was carried out in different ways in Gyeongsang and Jeolla provinces. In addition, the reform of Joun system in these provinces not only laid the foundation for the operation of Joun system, but also served as an opportunity to create the structural characteristics of fiscal operations in Joseon Dynasty.

Implication of Deficit Financing on Economic Recovery in Nigeria

The study examined the implication of deficit financing on Economic recovery in Nigeria. The study used secondary data from CBN statistical bulletin on various issues as relevant for the period under study (1981-2019). Augmented Dickey Fuller (ADF) unit root test, Johanson Co-integration test and normality test were employed for the analysis. The research findings revealed that deficit financing through External debt borrowing has a significant positive effect on economic recovery in Nigeria. Also Domestic debt has a positive significant effect on economic recovery in Nigeria. The study therefore, recommends that Government should set up monitoring teams that will make sure that the budget is well and carefully implemented and as well as loan borrowed in other to reduce corruption, linkages and wastages, the team will do this by holding everyone accountable for every government money spent. We recommended that government should strive to diversify its revenue base and also demonstrate a high level of transparency in both its monetary and fiscal operations among others. Government should maintain optimum level of external debt as it is one of the mechanisms for economic growth but to an optimum level and that all external debts hould be effectively utilized for the purpose for which it was obtained so as to promote economic growth.

Determinants of Budget Deficit in Nigeria

This paper investigates the factors governing the determination of budget deficit in Nigeria from 1981q1 through 2016q4. Our methodology is based on Johansen cointegration and Vector Error Correction model (VECM) approach. The result from the Johansen cointegration test suggests one cointegrating vector, which indicates the existence of a long run cointegrating relationship. Evidence from the long run and short run parameters suggest that exchange rate, interest rate and one year lag of budget deficit are the major determinants of budget deficit. Therefore, to achieve a realistic fiscal surplus, the government should determine a high level of accountability in its fiscal operations. In addition, any fiscal surplus should be channeled into productive investments to diversify the economy and reduce the likelihood of potential budget deficits.

Re-examining the government expenditure–growth nexus in ECOWAS countries

PurposeThe purpose of this study is to investigate the effect of government expenditure on economic growth in 15 Economic Community of West African States (ECOWAS) countries over the period of 2005–2017. More precisely, this paper investigates whether institutional environment influences the effect of government spending on economic growth.Design/methodology/approachThis study adopts the generalized method of moments-system method of estimation to address the problem of dynamic endogeneity inherent in the relationship. Similarly, unlike previous studies which assume that the disturbances of a panel model are cross-sectionally independent, we account for cross-section dependency and cross-country heterogeneity inherent in empirical modeling using Driscoll and Kraay's nonparametric covariance matrix estimator, adjusted for use with both balanced and unbalanced panels along with Monte Carlo simulations.FindingsThe authors find that though, government spending has a positive impact on economic growth but the level of institutional quality adversely affect that positive impact. This suggests that the institutional environment in ECOWAS countries is a drag and not a push factor for government fiscal operations and/policies. Thus, the results provide empirical evidence that there is a conditional relationship between government spending and economic growth in African countries. That is, the effect of government spending on economic growth is dependent on the quality of institutions. Lastly, these findings suggest that in order for government spending to contribute to economic growth, African countries must develop a strong institutional environment.Originality/valueUnlike previous time series studies for African countries which concentrated on the two variable case, we include institutional quality as a third variable to underline the potential importance of institutional quality for economic growth in ECOWAS countries.

The 'Kansas City' Approach to Modern Money Theory

Modern money theory (MMT) synthesizes several traditions from heterodox economics. Its focus is on describing monetary and fiscal operations in nations that issue a sovereign currency. As such, it applies Georg Friedrich Knapp’s state money approach (chartalism), also adopted by John Maynard Keynes in his Treatise on Money. MMT emphasizes the difference between a sovereign currency issuer and a sovereign currency user with respect to issues such as fiscal and monetary policy space, ability to make all payments as they come due, credit worthiness, and insolvency. Following A. Mitchell Innes, however, MMT acknowledges some similarities between sovereign and non-sovereign issues of liabilities, and hence integrates a credit theory of money (or, “endogenous money theory,” as it is usually termed by post-Keynesians) with state money theory. MMT uses this integration in policy analysis to address issues such as exchange rate regimes, full employment policy, financial and economic stability, and the current challenges facing modern economies: rising inequality, climate change, aging of the population, tendency toward secular stagnation, and uneven development. This paper will focus on the development of the “Kansas City” approach to MMT at the University of Missouri–Kansas City (UMKC) and the Levy Economics Institute of Bard College.

Fiscal Deficit Episode in Nigeria: What Is the Percentage of Error Correction between Public Revenue and Expenditure?

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.

FISCAL DEFICIT AND THE GROWTH OF DOMESTIC OUTPUT IN NIGERIA

The study focuses on the relationship between fiscal deficit and domestic output (using agricultural output as a proxy) in Nigeria. In other to have a robust model, other parameters of fiscal operations were included as explanatory variables namely, government revenue, government expenditure and government total debt stock. The study argued that even though there are no shortages of theoretical justifications on the impact of fiscal deficit on the national domestic output, empirical probe of the issue is scarcely pursued most especially for the agricultural sector. The model was estimated using the Engle-Granger testing approach to cointegration for the long-run analysis while a restricted error correction model was relied upon to explore the contemporaneous dynamics. The data obtained from Central Bank of Nigeria Statistical Bulletins covered the period 1986-2018. The study found that agricultural output has a long-run relationship with fiscal policy variables. In the long run, the study finds that government revenue and expenditure exert significant positive impact on agriculture output contrarily to the negative impact exhibited by government fiscal deficit and total debt stock. However, in the short run, agriculture output responded negatively to changes in fiscal deficit by 0.03%, government expenditure 0.03% and government total debt stock 0.09% contrarily to its 0.16% response to changes in government revenue. The paper recommended that government may consider reduction in deficit spending so as to minimize the country’s current level of borrowings. Also, government may consider broadening its revenue bases by intensifying its taxation policy. Finally, no effort should be spared by the government in blocking all looped holes in the country’s expenditure operations such as rent seeking and inflation of contracts.

Preparation, connection go a long way toward managing unexpected challenges

Looking back on his 28‐year career in higher education, James Davidson “Dusty” Porter, Ph.D., recalls the unexpected challenges he encountered while working at a private, tuition‐dependent college during the 2008 recession. “I remember very clearly the challenge of trying to determine, with the president's Cabinet, how we were going to stay afloat without eliminating jobs,” he said. “I have a memory of thinking ‘No one ever shared in my graduate preparation program how much time I would be spending on budgets and understanding fiscal operations.’”

Deficit Financing and Economic Growth in Nigeria: 1987-2017

The debt profile of the Government of Nigeria has been on the increase from 1986; climaxing during the worst recession Nigeria economy has entered into after the structural adjustment programme (SAP). With the reduction in government revenue occasioned by the fluctuations of price of crude oil in the international market and absolute recklessness on the part of successive government, the government has no option than to borrow to fund its day to day activities. This study examined the effect of deficit financing on economic growth of Nigeria from 1987 to 2017. Vector Autoregressive Estimates was used in estimating the model. The analysis performed revealed that deficit financing has positive but insignificant effect on Nigerian economic growth. We recommended that government should strive to diversify its revenue base and also demonstrate a high level of transparency in both its monetary and fiscal operations among others.

Deficit Financing and Economic Growth in Nigeria: 1987-2017

The debt profile of the Government of Nigeria has been on the increase from 1986; climaxing during the worst recession Nigeria economy has entered into after the structural adjustment programme (SAP). With the reduction in government revenue occasioned by the fluctuations of price of crude oil in the international market and absolute recklessness on the part of successive government, the government has no option than to borrow to fund its day to day activities. This study examined the effect of deficit financing on economic growth of Nigeria from 1987 to 2017. Vector Autoregressive Estimates was used in estimating the model. The analysis performed revealed that deficit financing has positive but insignificant effect on Nigerian economic growth. We recommended that government should strive to diversify its revenue base and also demonstrate a high level of transparency in both its monetary and fiscal operations among others.

“The Group”

During the early 1930s University of Chicago economists developed a comprehensive set of policy proposals that presaged those proposed by Fed economists and academics in the aftermath of the 2007–8 financial crisis. Using the quantity-theory framework to analyze the business cycle, the Chicagoans advocated the use of the federal government’s fiscal operations to conduct monetary policy—entailing an expansion of the size of the Fed’s balance sheet—to combat the Great Depression, the abandonment of the gold standard in favor of exchange-rate flexibility, one-hundred- percent reserve requirements against demand deposits, and the embedding of monetary-policy rules in legislation. This paper assesses departmental memoranda, correspondence, and published material to document the development of core characteristics that left the Chicagoans well-placed to resist the Keynesian revolution.

Fiscal Reaction Functions and Public Debt Sustainability in Nigeria: An Error Correction Mechanism Approach

The pervasiveness and persistent spiral of public debt in the country provide needed insights to determine the tendency for achieving sustainable debt. This, essentially, spurs the study to examine the responsiveness of Nigeria’s fiscal authorities to rising debt accumulation. As such, the study employs conventional unit root and cointegration approaches to estimate the fiscal reaction functions used in the study. Findings suggest that the existence of equilibrium relationship, in the models estimated, signals the fulfillment of the necessary condition for achieving debt sustainability. However, the sufficient condition for a sustainable public debt could not be met; this is evident in the negative response of government primary balances to changes in public debt in the long run. These findings readily affirm that government’s fiscal behaviour is not in tandem with the tenet of the intertemporal budget constraint as fiscal authorities could not generate enough surpluses in reaction to public debt increases. Therefore, there is threat to the feasibility of ensuring a sustainable public debt, importantly, as fiscal pressures and excesses still remain endemic issues. The study concludes that the fiscal operations of Nigerian government cannot sufficiently allow for a sustainable debt; hence, consistent running of this fiscal stance could either spur harsh adjustment measures in the long run or result to insolvency and default.