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Public Debt, Tax and Economic Growth in Sub-Saharan African Countries
(Springer Nature, 2023) Adedeji, A. A.; Oyinlola, M. A.; Adeniyi, O. A.
This study examines the effect of public debt on the relationship between tax and economic growth in sub-Saharan African countries. Grounded in the extended endogenous growth model, it employs a dynamic fixed-effects model to explore both linear and nonlinear relationships. For the full sample, the linear analysis demonstrates that tax measures contribute positively to economic growth regardless of public debt inclusion. Intriguingly, while public debt on its own has a detrimental effect on growth, its interaction with total taxes exhibits a positive influence. Conversely, the nonlinear approach reveals a negative association between public debt and growth. Moreover, the interaction term indicates that public debt weakly supports the impact of indirect taxes on economic growth while undermining the effectiveness of taxes on goods and services. However, the interactions between pub lic debt and other tax measures are not statistically significant. When considering various country classifications based on income level, fragility, and resource endowment under the linear approach, the study uncovers that several tax measures have a positive and statistically significant direct impact on growth. Furthermore, in low-income countries, public debt has a weaker effect on economic growth compared to that in middle-income countries. Public debt tends to reduce the effectiveness of direct taxes and taxes on income, profits, and capital gains in low-income countries. Conversely, public debt enhances only the effectiveness of indirect taxes in driving economic growth in middle-income countries. Under the nonlinear approach, mixed results are observed. Specifically, public debt predominantly undermines the effectiveness of most tax measures in middle-income countries. The findings across other country classifications also reveal diverse effects of public debt on the tax–growth relationship.
Financial Development and Economic Growth in Nigeria: Evidence from Threshold Modelling
(Elsevier Ltd, 2015) Adeniyi, O. A.; Oyinlola, M. A.; Omisakin, O.; Egwaikhide, F. O.
This paper re-examined the relationship between financial development and economic growth in Nigeria. Unlike existing studies, we attempted to assess the information content of non-linearities in the finance–growth nexus for Nigeria. We also attempted to inventively gauge the impact of financial reforms on the Nigerian economy particularly in terms of economic growth. Using annual data covering the period 1960–2010, we factored in threshold effects through the financial development (FD) measures. Following these, we unearth a number of interesting results. First, financial development negatively impacted growth but a sign reversal resulted on accounting for threshold-type effects. This is indicative of some turning points in the finance–growth association. Second, using a composite index of FD led to a similar outcome. Third, on the heels of sample splitting, the coefficients for the pre- and post-reform era are hardly distinguishable casting doubt on the efficacy of financial system reforms. On the basis of the foregoing, broader structural reforms should pervade Nigeria’s policy space if the aim of sustained, inclusive and employment-generating growth is to be realized.
An Empirical Re-examination of Exchange Rate-Trade Balance Nexus in Nigeria
(African Journal Online (AJOL), 2013) Oyinlola, M. A.; Omisakin, O.; Adeniyi, O. A.
The Nigerian exchange rate-trade balance nexus was re-examined. The long run relationship between these variables was explored using the Gregory-Hansen cointegration approach on a data sample between 1980:Q1 and 2010:Q4. Prior to this, three efficient integration tests that can overcome potentially severe finite sample power and size problems suffered by the standard methods were tactfully pursued for robustness. The short run impact analysis was done in the error correction framework. The analyses showed that exchange rate depreciation led to trade balance deterioration in both the short run and the long run. Thus, this study could not find support for J-curve in Nigeria. Some suggestions on the way forward were put forth.
The Dynamics of Stock Prices and Exchange Rate: Evidence from Nigeria
(West African Monetary Institute, 2012) Oyinlola, M. A.; Adeniyi, O. A.; Omisakin, O.
This paper probed the long-run and short-run dynamics between stock prices and exchange rates in Nigeria using the Johansen and Gregory-Hansen cointegration analyses, causality test and Exponentional General Autoregressive Conditional Heteroskedasticity modeling on daily data from January 2, 2002 to August 11, 2011.The results showed that there is no long run relationship between stock prices and exchange rate in Nigeria, albeit, with a structural break date of mid April 2007, which coincides with the period when the stock prices plumped precipitously from the impact of global financial crisis in early 2007. In addition, the results indicated that there is a unidirectional relationship from stock prices to exchange rate and that the EGARCH modeling suggested that a 100% increase in stock prices would lead to a 1.66% appreciation of the exchange rate. Thus, it is imperative for monetary authorities in Nigeria to take into account the role of stock market development in the conduct of its exchange rate policy.
Oil Price Shocks and Economic Growth in Nigeria: Are Thresholds important?
(John Wiley & Sons Inc., 2011) Adeniyi, O.A; Omisakin, O. A.; Oyinlola, M. A.
The impact of oil price shocks on the economy has occupied the attention of researchers for almost four decades. Majority of studies support the existence of a negative association, while some recent evidences seem to have popularised the view that outcomes are the artefacts of misspecified functional forms. This study, although similar in spirit to this popular opinion, is, however, distinct in a number of ways. Firstly, unlike most Nigeria-specific studies, this paper explores alternative measures of oil price shocks, which have been developed and used in the literature with a view to ascertaining the extent to which conclusions about the oil price-growth association depend on the definition of shocks adopted. More importantly, this, to the best of our knowledge, is a pioneer attempt at introducing threshold effects into the linkage between oil price shocks and output growth in Nigeria. The relatively recent regime-dependent multivariate threshold autoregressive model, together with the characteristic impulse response functions and forecast error variance decomposition, is adopted in this study. Using quarterly data spanning 1985–2008, a non-linear model of oil price shocks and economic growth is estimated. Our main results indicate that oil price shocks do not account for a significant proportion of Observed movements in macroeconomic aggregates. This pattern persists despite the introduction of threshold effects. This implied the enclave nature of Nigeria’s oil sector with weak linkages. Therefore, the need to spend oil revenue productively is imperative if favourable effect on real output growth is envisaged.
An Empirical Re-examination of Exchange Rate-Trade Balance Nexus in Nigeria
(African Journal Online (AJOL), 2013) Oyinlola, M. A.; Omisakin, O.; Adeniyi, O. A.
The Nigerian exchange rate-trade balance nexus was re-examined. The long run relationship between these variables was explored using the Gregory-Hansen cointegration approach on a data sample between 1980:Q1 and 2010:Q4. Prior to this, three efficient integration tests that can overcome potentially severe finite sample power and size problems suffered by the standard methods were tactfully pursued for robustness. The short run impact analysis was done in the error correction framework. The analyses showed that exchange rate depreciation led to trade balance deterioration in both the short run and the long run. Thus, this study could not find support for J-curve in Nigeria. Some suggestions on the way forward were put forth.
Oil Price Shocks and Economic Growth in Nigeria: Are Thresholds important?
(John Wiley & Sons Inc., 2011) Adeniyi, O. A.; Omisakin, O. A.; Oyinlola, M. A.
The impact of oil price shocks on the economy has occupied the attention of researchers for almost four decades. Majority of studies support the existence of a negative association, while some recent evidences seem to have popularised the view that outcomes are the artefacts of misspecified functional forms. This study, although similar in spirit to this popular opinion, is, however, distinct in a number of ways. Firstly, unlike most Nigeria-specific studies, this paper explores alternative measures of oil price shocks, which have been developed and used in the literature with a view to ascertaining the extent to which conclusions about the oil price-growth association depend on the definition of shocks adopted. More importantly, this, to the best of our knowledge, is a pioneer attempt at introducing threshold effects into the linkage between oil price shocks and output growth in Nigeria. The relatively recent regime-dependent multivariate threshold autoregressive model, together with the characteristic impulse response functions and forecast error variance decomposition, is adopted in this study. Using quarterly data spanning 1985–2008, a non-linear model of oil price shocks and economic growth is estimated. Our main results indicate that oil price shocks do not account for a significant proportion of Observed movements in macroeconomic aggregates. This pattern persists despite the introduction of threshold effects. This implied the enclave nature of Nigeria’s oil sector with weak linkages. Therefore, the need to spend oil revenue productively is imperative if favourable effect on real output growth is envisaged.
Public Debt, Tax and Economic Growth in Sub-Saharan African Countries
(Springer Nature, 2023) Adedeji, A. A.; Oyinlola, M. A.; Adeniyi, O. A.
This study examines the effect of public debt on the relationship between tax and economic growth in sub-Saharan African countries. Grounded in the extended endogenous growth model, it employs a dynamic fixed-effects model to explore both linear and nonlinear relationships. For the full sample, the linear analysis demonstrates that tax measures contribute positively to economic growth regardless of public debt inclusion. Intriguingly, while public debt on its own has a detrimental effect on growth, its interaction with total taxes exhibits a positive influence. Conversely, the nonlinear approach reveals a negative association between public debt and growth. Moreover, the interaction term indicates that public debt weakly supports the impact of indirect taxes on economic growth while undermining the effectiveness of taxes on goods and services. However, the interactions between public debt and other tax measures are not statistically significant. When considering various country classifications based on income level, fragility, and resource endowment under the linear approach, the study uncovers that several tax measures have a positive and statistically significant direct impact on growth. Furthermore, in low-income countries, public debt has a weaker effect on economic growth compared to that in middle-income countries. Public debt tends to reduce the effectiveness of direct taxes and taxes on income, profits, and capital gains in low-income countries. Conversely, public debt enhances only the effectiveness of indirect taxes in driving economic growth in middle-income countries. Under the nonlinear approach, mixed results are observed. Specifically, public debt predominantly undermines the effectiveness of most tax measures in middle-income countries. The findings across other country classifications also reveal diverse effects of public debt on the tax–growth relationship.
Domestic Resource Mobilization and Human Capital Development in Sub-Saharan Africa
(University of National and World Economy (UNWE), 2021) Adeniyi, O. A.; Oyinlola, M. A.; Adedeji A.
This study investigates the nexus between domestic resource mobilization using aggregated and disaggregated taxes, and human capital accumulation as measured❘ by the index of human capital and total factor productivity. The study explores panel Autoregressive Distributed Lag. We further explore the linear and nonlinear effects of taxes on human capital accumulation. The results from the scatterplots show that taxes at aggregate and disaggregated levels positively correlated with the two measures of human capital. On the linear analysis, the impact of aggregated and disaggregated taxes is largely negative under the index of human capital but largely positive under the second measure in the short-run. However, the long-run results indicate that aggregate and disaggregated taxes significantly amplify human capital accumulation. On nonlinearity, there is no presence of human capital laffer curve (HCLC) in the short-run under the two measures of human capital. However, there is presence of HCLC in the long-run. The net effects results show that some taxes (such as indirect taxes, taxes on goods and services) are distortionary in improving the level of human capital development while some taxes (such as total tax, direct tax, taxes on income, profit, and gains) can distort human capital development in the SSA region.
Financial System Development and Economic Growth in Sub-Saharan Africa
(West African Institue of Financial Economic Managemnt, 2016) Egwaikhide, F. O.; Oyinlola, M. A.; Omisakin, O.; Adeniyi, O. A.
This paper contributes to the age-old debate on the link between financial development and economic growth by examining the role of monetary policy. There is a possibility that monetary policy enhances financial system performance with attendant impact on growth. To unveil this influence, this paper employs fixed effects and System GMM on data from 28 sub-Saharan African countries over the period 1996 to 2014. Results from the baseline estimation using fixed effects indicate that financial development indicators are negatively and significantly associated with growth for two of the three measures used (LGDP and PGDP), while money growth is positively related albeit insignificantly. The results largely remain the same on interaction with money growth. The coefficients of the interactive terms though largely negative are, however, not significant. The results from System GMM presents a different outcome. First, all measures of financial development turn out positive (except BBD) and insignificant. Financial development equally turns negative but insignificant after interacting with money growth. Overall, monetary policy measures, together with their interactions with financial development indicators, show up as weak growth predictors if not dampening, suggestive of the plausible independence of the nexus on the actions of monetary authorities in these countries.

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