Fiscal dominance and inflation: Evidence from Nigerian and South African’s experiences

Figures & data

Table 1. Summary statistics

Statistics	Nigeria			South Africa
	MS	DEBT	CONS	MS	DEBT	CON
Mean	3.151	6.912	25.54	4.079	3.507	26.04
Median	3.085	7.0855	25.282	3.995	3.453	25.97
Maximum	3.767	9.301	26.48	4.391	3.843	26.55
Minimum	2.582	2.604	24.74	3.817	3.0982	25.58
Std. Dev.	0.265	0.941	0.566	0.174	0.225	0.314
Skewness	0.175	−0.757	0.468	0.456	0.141	0.275
Kurtosis	2.696	2.383	1.724	1.718	1.843	1.694
Jarque–Bera	0.314	3.898	3.65	3.711	2.125	3.01
Probability	0.854	0.1423	0.16	0.156	0.345	0.221
Sum	110.3	241.9	894.1	146.8	126.2	937.6
Sum Sq. Dev.	2.398	128.1	10.89	1.061	1.779	3.46
Observations	152	152	152	152	152	152

Source: Author’s computation.

Table 2. Unit root test for the variables in level and 1^st difference (Nigeria)

Series	ADF test		PP test
	Level	1st diff.	Level	1st diff.
MS	0.1170	0.0003*	0.2205	0.0000*
DEBT	0.0921	0.0021*	0.1261	0.0021*
CONS	0.9855	0.0000*	0.9824	0.0000*

* Represents significance at 5% level of significance.

Source: Author’s computation.

Table 3. Unit root test for the variables in level and 1^st difference (South Africa)

Series	ADF test (Prob. Values)		PP test (Prob. Values)
	Level	1st diff.	Level	1st diff.
MS	0.8944	0.0020*	0.8564	0.0020*
DEBT	0.1892	0.0005*	0.4664	0.0175*
CONS	0.9715	0.0088*	0.9729	0.0191*

* Represents significance at 5% level of significance.

Source: Author’s computation.

Table 4. Co-integration test results (Nigeria)

Eigen value	Trace statistic	5 Percent critical value	Hypothesised NO of CE(s)
0.531934	35.94904	29.79707	None *
0.457969	28.89720	27.49471	At most 1 *
0.031352	1.051169	3.841466	At most 2
Eigen value	Max-Eigen statistic	5 Percent critical value	Hypothesised NO of CE(s)
0.531934	25.05183	21.13162	None *
0.457969	9.846036	14.26460	At most 1 *
0.031352	1.051169	3.841466	At most 2

Notes: Both Trace test and maximum Eigen statistics indicate two co-integrating equations at 5-percent significant level; * denotes rejection of null hypothesis at 0.05 significant level; Critical values are from Mckinnon-Haug-Michelis (1999); The results reported are based on the assumption of constant and a liner trend with optimal lag length 1.

Source: Author’s computation.

Table 5. Co-integration test results (South Africa)

Eigen value	Trace statistic	5 Percent critical value	Hypothesised NO of CE(s)
0.583057	33.69677	24.27596	None *
0.309475	31.953341	20.32090	At most 1 *
0.000330	0.011235	4.129906	At most 2
Eigen value	Max-Eigen statistic	5 Percent critical value	Hypothesised NO of CE(s)
0.583057	29.74343	17.79730	None *
0.309475	23.94210	11.22480	At most 1 *
0.000330	0.011235	4.129906	At most 2

Notes: Both Trace test and maximum Eigen statistics indicate two co-integrating equations at 5-percent significant level; * denotes rejection of null hypothesis at 0.05 significant level; Critical values are from Mckinnon-Haug-Michelis (1999); The results reported are based on the assumption of constant and a liner trend with optimal lag length 1.

Source: Author’s computation.

Table 6. Philips and Ouliaris co-integration test results

Deterministic term	Test statistic	Critical values
Absence of Trend	8.61	−3.6
With Trend	7.326	−4.1

Note: Critical values are computed from the MacKinnon’s table on co-integration test.

Source: Author’s computation.

Table 7. Philips and Ouliaris co-integration test results

Deterministic term	Test statistic	Critical values
Absence of trend	11.327	−3.6
With trend	10.816	−4.1

Note: Critical values are computed from the MacKinnon’s table on co-integration test.

Source: Author’s computation.

Table 8. Degree of fiscal and monetary policies interdependence in Nigeria & South Africa (DOLS MODEL)

Country	${\rho }_1$	$\hspace{0.17em}{\rho }_2$=$-\left(1-\delta \right)$	$\delta$ (degree fiscal and monetary Policies interdependence with p-value in parenthesis
Nigeria	0.43768	−0.1590	0.841 (0.0111)
South Africa	0.55156	−0.3297	0.6703 (0.0000)

Source: Author’s computation.

Figure 1. Inflationary trend in Nigeria.

Source: Author’s computation.

Figure 2. Inflationary trend in South Africa.

Source: Author’s computation.