EFFECT OF FISCAL POLICY ON ECONOMIC GROWTH IN NIGERIA: 2001-2021

Abstract

The study examined the effect of fiscal policy on Nigeria’s economy growth for the period 2001 to 2021. The government expenditure is on the increase with the accompanying high borrowings from both external and domestic sources but there seems not to be a commensurate growth in the economy. This study used gross domestic product (GDP) as dependent variable, while independent variables were total recurrent expenditure (TRE), total capital expenditure (TCE) and total government revenue (TGR). Data was sourced from the CBN statistical bulletin. The specific objectives of this study were: to determine the effect of TRE on the GDP; to evaluate the effect of TCE on the GDP; to examine the effect of TGR on the GDP. The study adopted ex-post facto research design and data were analyzed using OLS technique. The hypotheses were tested at 5% level of significance, while SPSS version 25 was used for analysis.

The study revealed that: total recurrent expenditure had positive and significant effect on gross domestic product (prob. – 0.000); total capital expenditure had negative and non-significant effect on gross domestic product (prob. – 0.313); total government revenue had positive but non-significant effect on gross domestic product (prob. – 0.283) in Nigeria for the period reviewed. It was recommended that: (1) The Nigerian government should ensure that the recurrent expenditure is properly channeled (2) Government expenditures need to be properly channeled, monitored and evaluated to avoid wastages. (3) The Nigerian government should ensure that her revenue base is not only diversified but also boosted