Product Tax Revenue and Economic Growth in Nigeria: An Engle-Granger Approach, Evidence From 1981 - 2019

Journal of Advanced Research in Economics and Administrative Sciences

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Field Value
 
Title Product Tax Revenue and Economic Growth in Nigeria: An Engle-Granger Approach, Evidence From 1981 - 2019
 
Creator Amalu , Henry Ikechukwu
Ukwueze , Thaddeus Nnaemeka
Olife, Loenard U.
Irokwe, Favour Friday
 
Subject Product Tax Revenues, Economic Growth, Engle-Granger Approach, Granger Causality
 
Description Purpose: Product tax is an essential tool for governments, serving both as a revenue generator and fiscal policy instrument. The paper examines short-run and long-run relationships shared by product taxes and economic growth in Nigeria for the period, 1981 to 2019.
Approach/Methodology/Design: The study checks the stationarity properties of the series by testing them for unit roots using Augmented Dickey Fuller (ADF) method and Philip-Perron unit root test. Both unit root tests indicate that the series is stationary at first difference. In view of this, the study deploys a cointegration technique, Engle-Granger two-step procedure to determine the long-run and short-run links shared by the variables of interest. The Error Correction Mechanism (ECM) estimation and the Granger causality estimations for speed of adjustment and causality of the variables were also used.
Findings: The results reveal that product tax revenues and economic growth cointegrate in the long-run; while product tax revenues exert a significant positive effect on economic growth both in the short-term and long-term. The outcome of the Error Correction Mechanism (ECM) estimation shows a swift speed of adjustment to a new long-run equilibrium after a shock. The outcome of the Granger causality estimations indicates a uni-directional causality from economic growth to revenues from product taxes.
Practical Implications: This study is significant at this point when the country is facing increasing economic challenges. It will be useful to policy makers who might want to explore the possibility of using product tax as a fiscal policy tool, and a source of revenue to augment the declining revenue of the government from other sources.
Originality/value: The paper explores short-run and long-run relationships shared between product taxes and economic growth in Nigeria using a two-step procedure of Engle and Granger, and it verifies causality link between the later and the former.
 
Publisher Baynoon Centre for Studies and Development
 
Date 2020-11-08
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://bcsdjournals.com/index.php/jareas/article/view/111
10.47631/jareas.v1i2.111
 
Source Journal of Advanced Research in Economics and Administrative Sciences; Vol. 1 No. 2 (2020): Journal of Advanced Research in Economics and Administrative Sciences; 66-76
2708-9320
 
Language eng
 
Relation https://bcsdjournals.com/index.php/jareas/article/view/111/55
 
Rights https://creativecommons.org/licenses/by/4.0
 

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