Tax Revenue Shocks and Economic Growth in Nigeria, 1961-2011

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Author	Dada Matthew Abiodun, Oyeneye Taiwo, Dahn Henry Flomo
ISSN	2307-2466
On Pages	59-70
Volume No.	3
Issue No.	2
Issue Date	April 01, 2020
Publishing Date	April 01, 2020
Keywords	Tax revenue shocks, economic growth, government expenditure, VAR model, Nigeria

Abstract

This study examined the impact of tax revenue shocks on economic growth in Nigeria during the period from 1961 to 2011. Times series data on variables (government expenditure, tax revenue, GDP and consumer price index) were used. The data were sourced from the CBN Statistical Bulletin 2012 edition and World Development Indicators (WDIs) version 2012. The unit root property of each of the variables was investigated using ADF and PP unit root tests. The study also employed Johansen co integration technique to test for the co integration relationship among the variables in the VAR model. The results indicate that tax revenue shocks have positive effect on government expenditure and real output. The findings also suggest that tax revenue turns out to contribute increasingly to innovations in government spending and real output from the first year up to the end of the period. The study concluded that any policy that induces tax revenue will equally induce government expenditure and real output, hence, tax revenue shocks have positive effect on long-run economic growth in Nigeria.

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