REVENUE DISTRIBUTION FROM FEDERATION ACCOUNT AND MONEY SUPPLY: EVIDENCE FROM NIGERIA

Cordelia Onyinyechi Omodero

Abstract


Abstract

Money supply in every economy is very vital for economic growth and stability.  However, the role of revenue distribution in ensuring the success of monetary policies revolving around money supply in Nigeria cannot be over-estimated.  The study examines the impact of revenue distribution to the three tiers of government on money supply (MSS) in Nigeria.  Time series data used for the study estimation span from 1981-2016 and were obtained from CBN statistical bulletin, 2016 edition and World Bank website.  The specific purpose of the study is to establish the extent to which revenue allocation to federal, state, local governments and derivation allowance to the mineral producing states affect money circulating in the Nigerian economy.  Ordinary least square method (OLS) was employed with the aid of SPSS version 20 to test the impact of revenue distribution on money supply.  The findings reveal that revenue allocation to federal government has a significant positive impact on money supply.  Allocation to local government councils has insignificant positive impact on money supply.  On the contrary, allocation to states and the derivation allowance to Niger Delta States exert significant negative influence on MSS in Nigeria.  The study concludes that, revenue allocation to states and derivation allowance contribute to inflation in the country and recommended stringent monetary policies that will determine the percentage of allocated revenue usage by all tiers of government in a particular period to avoid too much money in circulation.  

 

Keywords:  Revenue distribution, allocation, money supply, economic stability, derivation.

JEL CODE: E51, E64.

 

 


Keywords


Revenue distribution, allocation, money supply, economic stability, derivation.

Full Text:

PDF

References


References

Abubakar, I. H. (1986). Public finance and budgeting: principles, practice and Issues with

Particular reference to Nigeria. An unpublished manuscript.

Alexander, O. (2015). Tax Revenue Generation and the Economic Development of Ghana.

European Journal of Business and Management, 7(14), 78-88.

Arrow, K.J. (1974). General Economic Equilibrium: Purpose, Analytic Techniques, Collective

Choice. American Economic Review, American Economic Association, 64(3), 253-272.

Arowoshegbe, A.O., Uniamikogbo, E. & Aigienohuwa, O.O. (2017). Tax Revenue and Economic

Growth in Nigeria. Scholars Journal of Economics, Business and Management, 4(10),

-702.

Ashwe, C. (1986). Fiscal federalism in Nigeria. Research monograph No. 46. Centre for research

On federal financial relations, the Australian National University, Camberra.

Ayinde, K., Bello, A.A., & Ayinde, O.E. (2015). Modeling Nigerian Government Revenues and

Total expenditure: an error correction model approach. Invited paper presented at the 4th International conference of the African Association of Agricultural Economists (ICAAAE), September 22-25. Hammamet, Tunisia.

Central Bank of Nigeria (2016). What is monetary policy? CBN Monetary Policy Series,

CBN/MPD/Series/01/2006.

Central Bank of Nigeria (2016). Monetary policy. CBN Education in Economic Series No. 2.

Chen, J. (2018). Money Supply. Retrieved from: https://www.investopedia.com on December 21,

Constitution of the Federal Republic of Nigeria (1999). Second Schedule. Part 1: Exclusive List.

Part 11: Concurrent Legislative List. Part 111 Supplemental and Interpretation

Durbin, J., & Watson, G. S. (1950). Testing for Serial Correlation in Least Squares Regression, I.

Biometrika, 37 (3–4), 409–428. Doi: 10.1093/biomet/37.3-4.409. JSTOR 2332391.

Durbin, J., & Watson, G. S. (1951). Testing for Serial Correlation in Least Squares Regression,

II. Biometrika, 38 (1–2), 159–179. Doi: 10.1093/biomet/38.1-2.159. JSTOR 2332325.

Field, A.P. (2009). Discovering statistics using SPSS: and sex and drugs and rock ‘n’ roll (3rd

Edition). London. Sage.

Gujarati, D.N., & Porter, D.C. (2009). Basic Econometrics (5th Ed.). Boston: McGraw-Hill

Irwin. ISBN 978-0-07-337577-9.

Koutsoyainnis, A. (1977). Theory of econometric. Humpshire Macmillan Education Ltd, London.

Muriithi, C.M. (2013). The relationship between government revenue and Economic growth

In Kenya. MBA Research Project submitted to the University of Nairobi, Kenya.

Musgrave, R.A. (1959). The Theory of Public Finance. McGraw Hill, New York.

Ogbonna, G.N., & Ebimobowei, A. (2012). Impact of Petroleum Revenue and the Economy of

Nigeria. Current Research Journal of Economic Theory, 4(2), 11-17.

Okunrounmu, T. O. (1999). Policy issues in fiscal federalism and Nigeria’s economic

Development. Proceedings of the 1999 annual conference of the Nigerian Economic Society, pp. 453-475.

Omodero, C.O. & Worlu, C.N. (2018). Monetary policy and oil revenue in Nigeria: pre and post

Effect analysis. Covenant Journal of Business & Social Sciences (CJBSS), 9(1), 87-98.

Oti, P.A., & Odey, F.I. (2016). Nigeria’s revenue profile and development mesh. Research

Journal of Finance and Accounting, 7(19), 58-64.

Yakubu, M., Umar, U., & Aminu, B.Z. (2014). Relationship between money supply and

Government revenues in Nigeria. CBN Journal of Applied Statistics, 5(2), 117 – 136.


Data citation

NILL



Copyright (c) 2019 Cordelia Onyinyechi Omodero

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.


As to respect GDPR, this site do not allow free registation. Please contact us at: ashues@spiruharet.ro

GDPR Policy:

Please read the statement below:
Processing of personal data and free movement of these data

Registering with this site the author agree with the collection, processing and use of his personal data, exclusively within the ASHUES journal.


 

AWARDS 

WILL BE CONFERRED AT THE END OF THE YEAR

To crown and encourage research efforts of the authors, at the end of a year of publishing our journal board will award online the best papers by distinctions:

1. Best Original Paper Award -  for the paper that has brought something completely new in the reader's attention (a new concept, a new trend, a new proposal in research, etc.)

2. Excellence Award - for the most cited paper and visualized in the online environment during the year

3. First, Second and Third Award- for the best documented and substantiated papers during the year

4. Special Award - to award PhD students and postdocs for the most well documented and substantiated paper


Administred:Rocsana B. Manea Tonis

http://icourses.wix.com/itmk