Fiscal Policy and Public Debt Sustainability in Nigeria

The study investigated fiscal policy and public debt sustainability in Nigeria between 1990 and 2017, by employing an error correction model and IMF/World Bank debt burden indicators such as solvency and liquidity ratios. The results from IMF/World Bank debt burden indicators revealed that Nigeria’s debt has been sustainable over the last 8- 10 years using the solvency ratios. Also, the liquidity indicator (debt service/export earnings) showed that Nigeria was able to meet its short term liabilities, as the debt burden indicators were below the indicative threshold of 20%. On fiscal policy sustainability, the empirical result using cointegration test revealed that the fiscal variables were cointegrated, indicative of the fact that fiscal policy in Nigeria was sustainable. However, it was further revealed by Wald coefficient restriction test that although fiscal policy in Nigeria was sustainable, it was found to be weakly sustainable. Thus, Nigeria could introduced debt ceilings in order to prevent explosion of the initial stock of debt arising from arbitrary borrowings by state governments. DOI: 10.7176/JESD/10-19-02 Publication date:October 31st 201

Oil Price Shocks and Variations in Macroeconomic Variables in Nigeria

The study was an evaluation of the impact of oil price fluctuations on specific macroeconomic variables in Nigeria for the period, 1981-2017. This was examined to establish the innovations oil price will caused on some selected macroeconomic variables such as government revenue, government expenditure, money supply, inflation, real gross domestic product and unemployment. Using results from impulse responses and variance decompositions from a VAR, the result showed that oil price fluctuations largely accounted for the variations in six out of seven macroeconomic variables namely government revenue (GREV), government expenditure (GEXP), money supply (MS2), real gross domestic product (RGDP) and unemployment (UEMP) while its impact on inflation (INF) was found to be insignificant thus, providing evidence that oil price is not inflationary in an open economy such as Nigeria. The result of the impulse response function (IRF) also revealed that aside from inflation which had a negative response to oil shock, all other six variables such as government revenue, government expenditure, money supply, real gross domestic product and unemployment had a positive significant response to oil shock throughout the 10th quarters.From the empirical investigation, it can be concluded that a combination of fiscal and monetary policies could provide effective instruments for the stabilization of the economy after an oil shock. DOI: 10.7176/JETP/9-5-01 Publication date:June 30th 201