Budget Implementation and Output growth in Nigeria(1986-2019)(An Empirical insight from FM-OLS and ECM Techniques)

Author(s)

Akinsode K.A , Oloruntuyi A.O ,

Download Full PDF Pages: 05-17 | Views: 369 | Downloads: 75 | DOI: 10.5281/zenodo.6541944

Volume 11 - February 2022 (02)

Abstract

This study investigates the effect of budget implementation on Output growth. Gross Domestic Product (GDP) was used as the explained variable proxy while Recurrent Expenditure (RECEX), Capital expenditure, (CAPEX), Budget implementation rate (BIR) and Public Debt Servicing (PDS) were used as the explanatory variables of the study. Data on these variables were sourced from the Central Bank of Nigeria statistical bulletin and various publications of the ministry of finance from 1986 to 2019. The study adopted Fully Modified Ordinary Least Square (FM-OLS), Co-integration and Error Correction Model (ECM) in analyzing respectively the short and long-run effect of budget implementation on Nigeria’s economic growth.
The data gotten were Normalized using Log transformation conversion method in order to standardize it and make it of the same unit of measurement (rate) with the budget implementation rate which is the major variable of the model. The findings from the study revealed that in the short run, LRECEX and LPDS  have a Negative and significant relationship with GDP while LCAPEX and LBIR will have a significant and  Positive relationship with GDP. In the long run, there was a complete turn of relationship as to what was obtained in the short run. Based on these it is recommended that government should try to put in place effective machineries that will ensure the strict adherence to due process and total implementation of annual budget provision and avoid diversion of public funds to personal uses

Keywords

Budget implementation, Economic growth, FM-OLS,  ECM

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