The Effectiveness of Fiscal Policy on the Economic Growth of Nigeria

Filed in Economics Project Topic by on October 18, 2020

The Effectiveness of Fiscal Policy on the Economic Growth of Nigeria.

ABSTRACT

The effectiveness of the fiscal policy on the growth of Nigeria economy has been a thing of debate over the years. The objective of the research is to provide evidence for the effectiveness of the fiscal policy on economic growth.

The research covers a period of 1981 to 2015 and data was collected from CBN’s statistical bulletin.

The result findings show that fiscal policy instrument such as capital and recurrent expenditure cannot significantly explain economic growth.

Also, recurrent expenditure shows an inverse relationship with growth meaning an increase in recurrent expenditure will lead to a decrease in growth.

Total Federal Collected Revenue (Taxes) significantly explained economic growth in Nigeria. In conclusion, the research work reveals that fiscal policy which has to do with the manipulation of government revenue and taxes is not effective to the growth of Nigerian economy.

INTRODUCTION

Fiscal policy is the use of government revenues and expenditure policies to regulate and stabilize the economy toward development. The government uses this policy in other to achieve its objectives in stabilizing the economy.

This includes the macroeconomic objectives (price stability, economic growth, reduction in poverty, the balance of payment equilibrium etc.) and microeconomic influence on the efficiency of resources use.

The question is “how precisely do these channels work in developing economies? What kind of revenue and expenditure policies should developing countries adopt to help realize this objective?

REFERENCES

Adan, C.S. and Bevan, D.L (2004). Fiscal Deficits and Growth in Developing Countries, Journal of Public Economics, vol. 89, pp. 511-597.

Adefaso,(2010). Bo fiscal Policy and Economic Growth in Nigeria: Testing the Prediction of Endogenous Growth Model. The Social Sciences, Medwell Journals, vol. 5, No. 2.

Agu, S.U., (2015). Fiscal Policy and Economic Growth in Nigeria: Emphasis on Various Components of Public Expenditure. SAGE Open. Sqo. Sagepub.com

Ahuja, H.L. (2015). Modern Economics (19th edition). Nirja Publishers Pvt. Ltd. by S. Cland and Company Pul. Ltd. New Delhi-110 056.

Aigheyesi, O.S. (2010). Examining the Relative Effectiveness of Monetary and Fiscal Policies in Nigeria: A Co-integration and Error Correction Approach. SSRN.

Comments are closed.

Hey Hi

Don't miss this opportunity

Enter Your Details