The Effect of Fiscal Policy on Economic Growth in Nigeria

Abstract

This study investigated the effect of fiscal policy on economic growth in Nigeria. The main objective is to analysis how various components of fiscal policy have contributed to the growth rate of the Nigerian economy. This study uses secondary data which were obtained from the Statistical Bulletin of the Central Bank of Nigeria (CBN) covering the period from 1985 to 2015. Descriptive statistics and the ordinary least square (OLS) multiple regression analytical method was used for the data analysis after ensuring data stationarity. The results from the analysis revealed that total government expenditures is significantly and positively related to government revenue, with expenditures climaxing faster than revenue. Investment expenditures were much lower than recurrent expenditures evidencing the poor growth in the country’s economy. Consequently, it is recommended that government should formulate and implement viable fiscal policy options that will stabilize the economy. This could be achieved through the practice of true fiscal federalism and the decentralization of the various levels of government in Nigeria. Keywords: