<abstract xmlns="http://www.w3.org/1999/xhtml"><bold>Research background:</bold> Output volatility has potentially adverse consequences on the economy and the stabilizing role of fiscal policy is linked to the share of government size in an economy. Hence, given the relative large share of government in developing countries, government size is expected to play an important role in stabilizing output volatility.<bold>Purpose:</bold> This study examines the relationship between output volatility and government size in Nigeria. The study seeks to establish if government size mitigates output volatility in Nigeria.<bold>Research methodology:</bold> The study employs the Autoregressive Distributed Lag (ARDL) technique after conducting stationarity and co-integration tests.<bold>Results:</bold> The results of the ARDL estimate showed that government size lessens output volatility but the magnitude was insignificant. Further, the study found that volatility in aggregate government spending; international oil price and public debt were significant determinants of output volatility in Nigeria.<bold>Novelty:</bold> This showed that the automatic stabilization role of government size on output volatility could not be established. The automatic stabilization role of fiscal policy can be improved by increasing social security transfers (pension payment), payments of unemployment benefits and increasing civil servants minimum wage.</abstract>

Research background: Output volatility has potentially adverse consequences on the economy and the stabilizing role of fiscal policy is linked to the share of government size in an economy. Hence, given the relative large share of government in developing countries, government size is expected to play an important role in stabilizing output volatility.Purpose: This study examines the relationship between output volatility and government size in Nigeria. The study seeks to establish if government size mitigates output volatility in Nigeria.Research methodology: The study employs the Autoregressive Distributed Lag (ARDL) technique after conducting stationarity and co-integration tests.Results: The results of the ARDL estimate showed that government size lessens output volatility but the magnitude was insignificant. Further, the study found that volatility in aggregate government spending; international oil price and public debt were significant determinants of output volatility in Nigeria.Novelty: This showed that the automatic stabilization role of government size on output volatility could not be established. The automatic stabilization role of fiscal policy can be improved by increasing social security transfers (pension payment), payments of unemployment benefits and increasing civil servants minimum wage.

Output Volatility and Government Size in Nigeria

Department of Economics, Faculty of Social Sciences

Folia Oeconomica Stetinensia

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

{"article-title":"Output Volatility and Government Size in Nigeria"}

Research background: Output volatility has potentially adverse consequences on the economy and the stabilizing role of fiscal policy is linked to the share of...

Output Volatility and Government Size in Nigeria

Published Online: Aug 20, 2020

Page range: 286 - 301

Received: Oct 01, 2019

Accepted: Mar 30, 2020

DOI: https://doi.org/10.2478/foli-2020-0017

Keywords
Output Volatility, Government Size, Auto-regressive distributed lag, Nigeria

© 2020 Philip I. Nwosa et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Output Volatility and Government Size in Nigeria

Published Online: Aug 20, 2020

Page range: 286 - 301

Received: Oct 01, 2019

Accepted: Mar 30, 2020

DOI: https://doi.org/10.2478/foli-2020-0017

KeywordsOutput Volatility, Government Size, Auto-regressive distributed lag, Nigeria

© 2020 Philip I. Nwosa et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
Output Volatility, Government Size, Auto-regressive distributed lag, Nigeria