FACULTY OF THE SOCIAL SCIENCES

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    An Empirical Re-examination of Exchange Rate-Trade Balance Nexus in Nigeria
    (African Journal Online (AJOL), 2013) Oyinlola, M. A.; Omisakin, O.; Adeniyi, O. A.
    The Nigerian exchange rate-trade balance nexus was re-examined. The long run relationship between these variables was explored using the Gregory-Hansen cointegration approach on a data sample between 1980:Q1 and 2010:Q4. Prior to this, three efficient integration tests that can overcome potentially severe finite sample power and size problems suffered by the standard methods were tactfully pursued for robustness. The short run impact analysis was done in the error correction framework. The analyses showed that exchange rate depreciation led to trade balance deterioration in both the short run and the long run. Thus, this study could not find support for J-curve in Nigeria. Some suggestions on the way forward were put forth.
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    Oil Price Shocks and Economic Growth in Nigeria: Are Thresholds important?
    (John Wiley & Sons Inc., 2011) Adeniyi, O. A.; Omisakin, O. A.; Oyinlola, M. A.
    The impact of oil price shocks on the economy has occupied the attention of researchers for almost four decades. Majority of studies support the existence of a negative association, while some recent evidences seem to have popularised the view that outcomes are the artefacts of misspecified functional forms. This study, although similar in spirit to this popular opinion, is, however, distinct in a number of ways. Firstly, unlike most Nigeria-specific studies, this paper explores alternative measures of oil price shocks, which have been developed and used in the literature with a view to ascertaining the extent to which conclusions about the oil price-growth association depend on the definition of shocks adopted. More importantly, this, to the best of our knowledge, is a pioneer attempt at introducing threshold effects into the linkage between oil price shocks and output growth in Nigeria. The relatively recent regime-dependent multivariate threshold autoregressive model, together with the characteristic impulse response functions and forecast error variance decomposition, is adopted in this study. Using quarterly data spanning 1985–2008, a non-linear model of oil price shocks and economic growth is estimated. Our main results indicate that oil price shocks do not account for a significant proportion of Observed movements in macroeconomic aggregates. This pattern persists despite the introduction of threshold effects. This implied the enclave nature of Nigeria’s oil sector with weak linkages. Therefore, the need to spend oil revenue productively is imperative if favourable effect on real output growth is envisaged.
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    Public Debt, Tax and Economic Growth in Sub-Saharan African Countries
    (Springer Nature, 2023) Adedeji, A. A.; Oyinlola, M. A.; Adeniyi, O. A.
    This study examines the effect of public debt on the relationship between tax and economic growth in sub-Saharan African countries. Grounded in the extended endogenous growth model, it employs a dynamic fixed-effects model to explore both linear and nonlinear relationships. For the full sample, the linear analysis demonstrates that tax measures contribute positively to economic growth regardless of public debt inclusion. Intriguingly, while public debt on its own has a detrimental effect on growth, its interaction with total taxes exhibits a positive influence. Conversely, the nonlinear approach reveals a negative association between public debt and growth. Moreover, the interaction term indicates that public debt weakly supports the impact of indirect taxes on economic growth while undermining the effectiveness of taxes on goods and services. However, the interactions between public debt and other tax measures are not statistically significant. When considering various country classifications based on income level, fragility, and resource endowment under the linear approach, the study uncovers that several tax measures have a positive and statistically significant direct impact on growth. Furthermore, in low-income countries, public debt has a weaker effect on economic growth compared to that in middle-income countries. Public debt tends to reduce the effectiveness of direct taxes and taxes on income, profits, and capital gains in low-income countries. Conversely, public debt enhances only the effectiveness of indirect taxes in driving economic growth in middle-income countries. Under the nonlinear approach, mixed results are observed. Specifically, public debt predominantly undermines the effectiveness of most tax measures in middle-income countries. The findings across other country classifications also reveal diverse effects of public debt on the tax–growth relationship.
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    Domestic Resource Mobilization and Human Capital Development in Sub-Saharan Africa
    (University of National and World Economy (UNWE), 2021) Adeniyi, O. A.; Oyinlola, M. A.; Adedeji A.
    This study investigates the nexus between domestic resource mobilization using aggregated and disaggregated taxes, and human capital accumulation as measured❘ by the index of human capital and total factor productivity. The study explores panel Autoregressive Distributed Lag. We further explore the linear and nonlinear effects of taxes on human capital accumulation. The results from the scatterplots show that taxes at aggregate and disaggregated levels positively correlated with the two measures of human capital. On the linear analysis, the impact of aggregated and disaggregated taxes is largely negative under the index of human capital but largely positive under the second measure in the short-run. However, the long-run results indicate that aggregate and disaggregated taxes significantly amplify human capital accumulation. On nonlinearity, there is no presence of human capital laffer curve (HCLC) in the short-run under the two measures of human capital. However, there is presence of HCLC in the long-run. The net effects results show that some taxes (such as indirect taxes, taxes on goods and services) are distortionary in improving the level of human capital development while some taxes (such as total tax, direct tax, taxes on income, profit, and gains) can distort human capital development in the SSA region.
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    Financial System Development and Economic Growth in Sub-Saharan Africa
    (West African Institue of Financial Economic Managemnt, 2016) Egwaikhide, F. O.; Oyinlola, M. A.; Omisakin, O.; Adeniyi, O. A.
    This paper contributes to the age-old debate on the link between financial development and economic growth by examining the role of monetary policy. There is a possibility that monetary policy enhances financial system performance with attendant impact on growth. To unveil this influence, this paper employs fixed effects and System GMM on data from 28 sub-Saharan African countries over the period 1996 to 2014. Results from the baseline estimation using fixed effects indicate that financial development indicators are negatively and significantly associated with growth for two of the three measures used (LGDP and PGDP), while money growth is positively related albeit insignificantly. The results largely remain the same on interaction with money growth. The coefficients of the interactive terms though largely negative are, however, not significant. The results from System GMM presents a different outcome. First, all measures of financial development turn out positive (except BBD) and insignificant. Financial development equally turns negative but insignificant after interacting with money growth. Overall, monetary policy measures, together with their interactions with financial development indicators, show up as weak growth predictors if not dampening, suggestive of the plausible independence of the nexus on the actions of monetary authorities in these countries.
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    Financial System Development and Economic Growth in Sub-Saharan Africa
    (West African Institue of Financial Economic Managemnt, 2016) Egwaikhide, F. O.; Oyinlola, M. A.; Omisakin, O.; Adeniyi, O. A
    This paper contributes to the age-old debate on the link between financial development and economic growth by examining the role of monetary policy. There is a possibility that monetary policy enhances financial system performance with attendant impact on growth. To unveil this influence, this paper employs fixed effects and System GMM on data from 28 sub-Saharan African countries over the period 1996 to 2014. Results from the baseline estimation using fixed effects indicate that financial development indicators are negatively and significantly associated with growth for two of the three measures used (LGDP and PGDP), while money growth is positively related albeit insignificantly. The results largely remain the same on interaction with money growth. The coefficients of the interactive terms though largely negative are, however, not significant. The results from System GMM presents a different outcome. First, all measures of financial development turn out positive (except BBD) and insignificant. Financial development equally turns negative but insignificant after interacting with money growth. Overall, monetary policy measures, together with their interactions with financial development indicators, show up as weak growth predictors if not dampening, suggestive of the plausible independence of the nexus on the actions of monetary authorities in these countries.
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    Natural Resource Abundance, Institutions and Economic Growth in Africa
    (Inderscience Enterprises LTD, 2015) Oyinlola, M. A.; Adeniyi, O. A.; Raheem, I. D.
    The study analysed the effect of institution on resource curse abundance-economic growth nexus using the system generalised method of moments. The empirical results refute the resource curse hypothesis in Africa. In addition, institutions have dampening effect on the nexus. This stems from the fact that the institutional development level of most African countries is weak. The study also found out that the resource curse hypothesis is not peculiar to oil wealth as indicated in the literature. Lastly, our results do not support the rentier effect as a possible channel of the hypothesis.
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    Empirical Exposition of Monetary Policy under Fixed and Managed Float Exchange Rate Regime: Any Lesson for Nigeria
    (Central bank of Nigeria, 2014) Egwaikhide, F. O.; Oyinlola, M. A.; Adeniyi, O. A.; Olanipekun, D. B.
    This paper empirically investigated the relationship between monetary aggregates and the exchange rate under alternative exchange rate regimes in Nigeria. Using data spanning 1961 to 2013 to estimate vector auto-regressive (VAR) models, a number of findings ensued. One, the impulse response functions (IRFS) showed that monetary aggregates were responsive to exchange rate shocks. However, this effect was found to be closely linked with the underlying exchange rate regime. Two, the variance decompositions (VDs) indicated that exchange rate shocks had no significant weight as there was no impact recorded on inflation, interest rate and money supply after one year under the fixed regime. Third, the corresponding VDs under the flexible regime showed that the effect of exchange rate on the monetary aggregates was more significant, especially in the long-run. A key policy implication of the foregoing results was that domestic economic management policies should be proactively orchestrated to better align the objectives of exchange rate policy with broader macroeconomic goals.
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    Impact of Oil Price Shocks on the Macroeconomy: Evidence from Nigeria.
    (West African Institute for Financial and Economic Management (WAIFEM),, 2014) Adeniyi, O. A.; Egwaikhide, F. O.; Oyinlola, M. A.
    The role of oil price shocks in the movements of key macroeconomic fundamentals such as output and inflation has been the focal point of many empirical enquiries. However, earlier studies on the oil price- output-inflation relationship in Nigeria hardly took an explicit account of potential non-linearities. This study, therefore, investigated the impact of oil price shocks on output and inflation in Nigeria between 1970 and 2006. A macroeconometric model which captured both the direct and indirect relationships between oil price shocks, output and inflation, was employed. Three alternative measures of oil price shocks namely linear, asymmetric and volatility were considered. The behavioural equations were estimated using the three-stage-least-squares technique and a general-to specific procedure was used to minimise the loss of valuable information. The linear benchmark model showed that the effect of oil price shocks on inflation was moderately important, while the effect on output was not significant. Specifically, in response to a doubling of oil price, output rose by 0.20% and it resulted in a 0.25% decline in inflation. The results of the asymmetric model indicated that a 100% increase in oil price would cause output to rise by 0.57%, but it would decline by only 0.13% following an oil price reduction of the same order of magnitude. The volatility measure showed that doubling the oil price would raise output by 0.45% and inflation would increase by 0.15%. The estimated results suggested that oil price shocks had trifling impact on output, while it appeared to have slight effect on inflation. This implied that the enclave nature of the oil sector and its weak linkages with the rest of the economy as well as better management via sterilisation may have moderated the effect of oil price shocks on both output and inflation respectively.
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    An Empirical Re-examination of Exchange Rate-Trade Balance Nexus in Nigeria
    (African Journal Online (AJOL), 2013) Oyinlola, M. A.; Omisakin, O. A.; Adeniyi, O. A.
    The Nigerian exchange rate-trade balance nexus was re-examined. The long run relationship between these variables was explored using the Gregory-Hansen cointegration approach on a data sample between 1980:Q1 and 2010:Q4. Prior to this, three efficient integration tests that can overcome potentially severe finite sample power and size problems suffered by the standard methods were tactfully pursued for robustness. The short run impact analysis was done in the error correction framework. The analyses showed that exchange rate depreciation led to trade balance deterioration in both the short run and the long run. Thus, this study could not find support for J-curve in Nigeria. Some suggestions on the way forward were put forth.