TY  - JOUR
T1  - Fiscal Adjustment to Currency Depreciation in Nigeria: An Empirical Analysis
AU - Omolara Yaqub, Jameelah 
JO  - Journal of Economics Theory
VL  - 3
IS  - 4
SP  - 71
EP  - 79
PY  - 2009
DA  - 2001/08/19
SN  - 1994-8212
DO  - jeth.2009.71.79
UR  - https://makhillpublications.co/view-article.php?doi=jeth.2009.71.79
KW  - Real exchange rate
KW  -government revenue
KW  -expenditure
KW  -depreciation
KW  -budget deficit
KW  -Nigeria
AB  - Nigeria underwent currency depreciation on a number of occasions in response to balance of payment difficulties, among other reasons. However, depreciation has implications for some other macroeconomic activities in a nation. Among such activities are the fiscal sector performances, which this study focuses on. The fiscal consequence of depreciation is of practical significance especially in Nigeria where a great proportion of tax revenue is from international transactions, which is expected to respond to exchange rate changes. To gain empirical insight into the relationship between real exchange rate and fiscal variables, a simple model was formulated and estimated. The findings of the study suggest that nominal depreciation resulted in real depreciation and that real depreciation augmented real fiscal revenue. The expenditure effect is however, insignificant. Budget deficit and increased openness are found to promote depreciation of real exchange rate. Where the current account is favourable, real depreciation by its fiscal consequences is found to reinforce, rather than dampen the position of the current account.
ER  -