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ABSTRACT:

This study makes unique contributions by exploring the investigation of the linear and non-linear effects of fuel subsidy removal on the per capita income of individuals in Nigeria. This gap serves as the motivation for conducting this research. This study's broad objective is to explore the symmetric and asymmetric effects of fuel subsidy removal on income per capita, adjusting for inflation, government spending, and the poverty rate in Nigeria. The results of the unit root test suggest that the econometrics analyses of linear ARDL and non-linear ARDL are appropriate for this study. The fitted linear ARDL (2, 2, 0, 1, 0) and non-linear ARDL (1, 2, 1, 1, 2, 1, 0, 1, 0) indicate that the removal of fuel subsidies has both symmetric and asymmetric effects on per capita income, while increases in inflation, government spending, and poverty rates lead to a decline in per capita income in the country. Thus, while it is important for the government to remove fuel subsidies to unveil fraud surrounding fuel subsidy payments and enhance infrastructural development in the country, the government should ensure that appropriate palliatives are made available to cushion the subsidy removal effect that could affect the livelihood of the poor citizens and also implement effective monetary policies to combat inflation.

KEYWORDS:

Fuel Subsidy Removal, Per Capita Income, Unit Root, Linear ARDL, Non-Linear ARDL

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