PUBLICATIONS

@workingpaper{NWAKA2015,
title = {Government Size, Openness and Income Risk Nexus: New Evidence from Some African Countries},
author = {Stephen ONIFADE T Ikechukwu D. NWAKA},
editor = {African 2015 Governance and Development Institute WP/15/056},
url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Government-Size-Openness-and-Income-Risk-Nexus.pdf},
year = {2015},
date = {2015-12-01},
abstract = {Empirical evidence for the compensation hypothesis holds that trade openness independent of
income risk has no significant effects on government size. Hence, using time series data for the
period 1965-2013 from Egypt, Ghana, Kenya, Nigeria and South Africa and applying the bounds
test method of cointegration, this paper investigates the nature of the relationship between
openness, income risk, terms of trade volatility and income per capita on government size in
each of the 5 African countries. Our empirical findings show a long-run relationship particularly
in Egypt and Ghana and a limited evidence for other countries. Similarly, after applying both the
Autoregressive Distributed Lags (ARDL) and Fully Modified OLS (FM-OLS) on original data
and Moving Average (MV) converted data, our findings vary across the countries due to
country-specific factors. Hence, the evidence we find does not support the compensation
hypothesis. However, we observe significant positive effects of income per capita on government
size for each country and some evidence of the mitigating and cushioning effects of governments
when exposed to income risks and volatility due to trade openness. We therefore suggest some
appropriate policy recommendations for the selected countries.},
keywords = {ARDL-bounds testing, FM-OLS; trade openness; income risk; government size; Africa.},
pubstate = {published},
tppubtype = {workingpaper}
}