Impact of Fiscal Policy on Economic Growth in Nigeria

ABSTRACT

This work is based on an empirical analysis of the impact of fiscal policy on economic growth in Nigeria 1981-2015. The main objective of this study is to empirical investigate/assess the impact of fiscal policy on Nigeria economic growth. A model was constructed to incorporate real gross domestic product (RGDP) as the dependent variable, tax, capital expenditure, recurrent expenditure, domestic debt as the independent variable and tested using the ordinary least-square (OLS) techniques. The empirical result shows that tax, capital expenditure and recurrent expenditure have significant impact on economic growth whereas domestic debt have no significant impact on the economic growth, more so, the result equally indicate that tax and capital expenditure have positive impact on the economic growth in Nigeria, whereas recurrent expenditure and domestic debt have negative relationship on the economic growth in Nigeria. Based on the result, the researcher recommends that Having seen the positive relationship that exist between tax and capital expenditure on the economic growth in Nigeria, Nigerian government should allocate more money to the capital project knowing very well that it will have a significant positive impact on the economic growth in Nigeria.