Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa
The flypaper effect is undoubtedly among the most interesting concepts in subnational government spending behavior. This study is the first attempt to provide empirical evidence on the existence of the flypaper effect in the two largest economies in Sub-Saharan Africa: Nigeria and South Africa. Usi...
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| Format: | Article |
| Language: | English |
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Modern Finance Institute
2023-11-01
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| Series: | Modern Finance |
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| Online Access: | https://mf-journal.com/article/view/46 |
| _version_ | 1797294422297149440 |
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| author | Abdurrahman Isik Peter D. Golit Paul Terhemba Iorember |
| author_facet | Abdurrahman Isik Peter D. Golit Paul Terhemba Iorember |
| author_sort | Abdurrahman Isik |
| collection | DOAJ |
| description |
The flypaper effect is undoubtedly among the most interesting concepts in subnational government spending behavior. This study is the first attempt to provide empirical evidence on the existence of the flypaper effect in the two largest economies in Sub-Saharan Africa: Nigeria and South Africa. Using the two-step system generalized method of moment’s estimator, our results show that the flypaper effect exists for both state and provincial governments in Nigeria and South Africa. Provincial governments in South Africa are found to be more responsive to positive changes in unconditional federal transfers than state governments in Nigeria. We therefore recommend sensitization on the receipt and disbursement of unconditional federal transfers. This will help reduce the illusion or information asymmetry about the use of unconditional federal transfers.
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| first_indexed | 2024-03-07T21:30:52Z |
| format | Article |
| id | doaj.art-9dead014d670422991dd390a8759ee0a |
| institution | Directory Open Access Journal |
| issn | 2956-7742 |
| language | English |
| last_indexed | 2024-03-07T21:30:52Z |
| publishDate | 2023-11-01 |
| publisher | Modern Finance Institute |
| record_format | Article |
| series | Modern Finance |
| spelling | doaj.art-9dead014d670422991dd390a8759ee0a2024-02-26T16:19:30ZengModern Finance InstituteModern Finance2956-77422023-11-011110.61351/mf.v1i1.46Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South AfricaAbdurrahman Isik0Peter D. Golit1Paul Terhemba Iorember2Epoka UniversityCentral Bank of NigeriaNile University of Nigeria The flypaper effect is undoubtedly among the most interesting concepts in subnational government spending behavior. This study is the first attempt to provide empirical evidence on the existence of the flypaper effect in the two largest economies in Sub-Saharan Africa: Nigeria and South Africa. Using the two-step system generalized method of moment’s estimator, our results show that the flypaper effect exists for both state and provincial governments in Nigeria and South Africa. Provincial governments in South Africa are found to be more responsive to positive changes in unconditional federal transfers than state governments in Nigeria. We therefore recommend sensitization on the receipt and disbursement of unconditional federal transfers. This will help reduce the illusion or information asymmetry about the use of unconditional federal transfers. https://mf-journal.com/article/view/46unconditional federal transfersflypaper effectstate spendingtwo-step systemgeneralized method of momentsNigeria |
| spellingShingle | Abdurrahman Isik Peter D. Golit Paul Terhemba Iorember Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa Modern Finance unconditional federal transfers flypaper effect state spending two-step system generalized method of moments Nigeria |
| title | Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa |
| title_full | Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa |
| title_fullStr | Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa |
| title_full_unstemmed | Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa |
| title_short | Unconditional federal transfers and state government spending: The flypaper effect in Nigeria and South Africa |
| title_sort | unconditional federal transfers and state government spending the flypaper effect in nigeria and south africa |
| topic | unconditional federal transfers flypaper effect state spending two-step system generalized method of moments Nigeria |
| url | https://mf-journal.com/article/view/46 |
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