An Empirical Relationship Between Fiscal Policy Measures and Economic Growth in Nigeria (1981 - 2018)

Abstract

The study investigated the relationship between fiscal policy and economic growth from 1981 to 2018.  Specifically the study ascertained the extent of relationship between government revenue, government expenditure, government borrowing and economic growth in Nigeria. Endogenous growth theory was employed as the theoretical basis for the study. Gross domestic product was employed as the dependent variable proxy for economic growth. Data used in the study were sourced from 2018 Central Bank of Nigeria Statistical Bulletin. In analysing the data, Augmented Dickey-Fuller (ADF) test statistics showed that all the variables used in the study are stationary at level. Johansen Cointegration result showed that a long term relationship exists between the variables used for the study. The regression results indicated that government revenue, government expenditure and government borrowings showed significant positive relationship with economic growth in Nigeria within the period under investigation. The study concludes that fiscal policy had a positive relationship with economic growth within the same period. The study recommended that government should ensure that policy inconsistencies and policy reversals are properly checked for both short and long run effects on the economy.