Effect Of Fiscal Policy On Gross Domestic Product: Evidence From Nigeria

ABSTRACT

The study analyzed the effect of fiscal policy on economic growth in Nigeria using time series data from 1990 to 2016. The data was sourced from Central Bank of Nigeria Statistical Bulletin, vol. 27, 2016. Fiscal policy was decomposed into government capital expenditure, recurrent expenditure, tax revenue and non-tax revenue, while economic growth was measured by real gross domestic product. The analysis of data was done using multiple regression analysis. Based on the outcome of the regression analysis, it was found that capital expenditure had a negative and significant effect on economic growth, while recurrent expenditure exerted a positive and significant effect on economic growth in Nigeria. The effect of tax revenue was found to be positive and insignificant, while non-tax revenue had a negative and insignificant effect on economic growth in Nigeria. Based on the findings, it was recommended among other things that Government of Nigeria should enhance investment in productive expenditure including expenditure on education as well as ensure that funds meant for development on these sectors are properly utilized.