VOlUME 01 ISSUE 01 SEPTEMBER 2024
1Matthew Chinedum Ezeh (PhD), 2Alexander Ugbome Onyekeni
1,2Department of Economics, Dennis Osadebay University, Anwai, Asaba
1Orcid iD https://orcid.org/0009-0000-1840-6664
ABSTRACT
This study examines poverty reduction with emphasis on the implications of fuel subsidy removal and government educational expenditure in Nigeria spanning between 1990 and 2022. Vector Error Correction Model (VECM) technique and Pairwise Granger Causality tests was adopted since the variables of the model are all integrated in order I(1) using ADF Unit Root Test and the data was extracted from the Central Bank of Nigeria (CBN) Statistical Bulletin, US Energy Information Administration and World Bank Development Indicator for Nigeria. The study found that PPP exact a negative and none significant relationship with PCI, GEE shows a positive relationship with PCI and not significant while EXR was found to indicate negative relationship with PCI and statistically significant. Further, there is no causal link between PCI, PPP and GEE but there is unidirectional link running from GEE to PPP and from EXR to GEE. It is therefore strongly recommended that Nigeria government should sustain the policy of fuel subsidy removal and strategically channel the inflows originally budgeted and spent on fuel subsidy to more productive sectors of the economy particularly education sector and others such as health sector, road construction to reduced transportation cost and the reactivation of local production and refining of petroleum product in Nigeria.
KEYWORDS:
Fuel Subsidy, Government educational expenditure, Poverty reduction, VECM,
JEL Code: I3, I31, O13
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