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Corresponding Author:
Okwuchukwu Odili, Department of Banking and Finance, College of Management Sciences, Michael Okpara University of Agriculture, Umuahia, Abia State, Nigeria

Coauthors:
Kingsley Onyekachi Onyele, Department of Banking and Finance, College of Management Sciences, Michael Okpara, University of Agriculture, Umuahia, Abia State, Nigeria

Crude Oil Price Volatility and Government Expenditure in Nigeria: Do Governance Dynamics Matter?

January 5, 2024
JEL classification: D72; D73; H27; H54
Keywords: Accountability; Governance; Government Expenditure; Oil Price Volatility; Transparency; ARDL

Abstract

This study looks at the effects of governance and crude oil price volatility on government expenditure in Nigeria. The main objective of the study is to provide information to the government on how oil price volatility and governance dynamics influences government expenditure in Nigeria by examining their trends using monthly data from 2015 to 2021. Volatility test is conducted using GARCH (1, 1). Due to mixed level integration of variables based on the result obtained from ADF approach to unit root test, ARDL model is employed in estimating the variables. Volatility test shows that oil price is persistently volatile. The estimation results reveal that government revenue positively influences government expenditure, while oil price volatility and governance indicators have a negative and significant effect on government expenditure. The data set provided evidence that crude oil price volatility and governance dynamics determine trends of government expenditure in Nigeria. This calls for pragmatic action in fighting corruption by setting up independent and functional anti-corruption agency empowered to probe corruption cases and persecute offenders. Participatory democracy whereby citizens’ vote would count in selecting their leaders in electioneering process is required to ensure that the right candidates are elected.

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Crude Oil Price Volatility and Government Expenditure in Nigeria: Do Governance Dynamics Matter?

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Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce