Effect Of Fiscal Policy On Investment Expenditure In Nigeria

ABSTRACT

The study provided an empirical analysis of the effect of fiscal policy on investment expenditures in Nigeria using time series data from 1999 to 2016 collected from the Central Bank of Nigeria statistical bulletin and the National Bureau of Statistics. Fiscal policy was measured by government total tax revenue and government total expenditures. The ordinary least squares (OLS) method of multiple regression was utilized in analyzing the log-linearized model. The findings were that, government total revenue and government total expenditure jointly explained about 94% of the total variations in investment expenditures as shown by the adjusted R-squared. The F-statistic showed that the joint effect of tax revenue and government expenditure was significant in affecting investment expenditures in Nigeria. Specifically, tax revenue and government expenditures had positive and significant effect on investment expenditures over the period of study. Consequently, it was recommended that government funds should be channeled towards provision of critical infrastructure so as to provide the enabling investment environment.

TABLE OF CONTENTS

Cover page ﾿ i

Declaration ﾿ ii

Certification ﾿ iii

Dedication ﾿ iv

Acknowledgements ﾿ v

Table of Contents ﾿ vii

Abstract  ﾿ ix

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study ﾿ 1

1.2 Statement of the Problem ﾿ 4

1.3 Objectives of the Study ﾿ 5

1.4 Research Questions ﾿ 5

1.5 ﾿ Research Hypotheses ﾿ 5

1.6 ﾿ Significance of the Study  ﾿ 6

1.7 ﾿ Scope of the Study ﾿ 6

1.8 ﾿ Limitations of the Study ﾿ 7

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1    Conceptual Framework ﾿ 9

2.1.1 Concept of Fiscal Policy ﾿ 9

2.1.2 Concept of Government Expenditure ﾿ 11

2.1.3 Types of Government Expenditure ﾿ 14

2.1.4 Measurement of Government Expenditure ﾿ 15

2.1.5 Role of Government Expenditure ﾿ 16

2.1.6 Tax Revenue ﾿ 17

2.1.7 Tax Administration in Nigeria ﾿ 20

2.1.8 Tax Avoidance and Tax Evasion Practices ﾿ 22

2.1.9 Concept of Investment ﾿ 23

2.1.10 Fiscal Policy and Investment ﾿ 25

2.2.1 Classical Theory of Investment ﾿ 28

2.3 Empirical Literature ﾿ 32

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design  ﾿ 37

3.2 Area of Study ﾿ 37

3.3 Sources of Data Collection ﾿ 37

3.4 Model Specification ﾿ 37

3.5 Description of the Research Variables ﾿ 39

3.5 Method of Data Analysis ﾿ 39

CHAPTER FOUR: PRESENTATION OF DATA, ANALYSIS AND DISCUSSIONS 

4.1 Presentation of Data ﾿ 41

4.2 Trend Analysis ﾿ 42

4.2.1 Investment Expenditure (INVEXP) ﾿   ﾿ 42

4.2.2 Trend of Total Government Tax Revenue (TTR) ﾿       ﾿ 43

4.2.3 Trend to Total Government Expenditure (TGEXP)  ﾿ 44

4.3 Regression Analysis ﾿ 45

4.4 Test of Hypothesis ﾿ 46

4.5 Discussion of Results ﾿ 46

CHAPTER FIVE:  SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS  

5.1 Summary of Findings ﾿ 48

5.2 Conclusion    ﾿ 48

5.3 Recommendation    ﾿ 49

APPENDIX ﾿

REFERENCES ﾿