IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 2 NO. 4 2016

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Fiscal Policy Sustainability and Economic Growth in Nigeria (1980-2015)

T.A. Odetayo (Ph.D) and A. Z. Adeyemi

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Abstract

The study examined fiscal policy sustainability and economic growth in Nigeria between1980-2015. To achieve this objective, secondary data obtained from Central Bank of Nigeria were used. Descriptive analysis was employed to determine the trends of the variables, and econometrics techniques were employed to investigate the sustainability of the fiscal policy on Nigeria economic growth. Augmented Dickey Fuller and Philips-Perron statistics were used to check whether the variables were stationary. Autoregressive Distributed Lag (ARDL) was used to test long run relationship of variables and examined the sustainability of fiscal policy. Error Correction Model (ECM) was used to examine the impact of fiscal policy on Nigeria economic growth. The results of the study showed that government revenue, government expenditure and fiscal deficit increased tremendously during the period covered. The results of ARDL which further subjected to Wald test revealed that fiscal policy was weakly sustainable in Nigeria during the period 1980-2015with the results of (t-statistic=3.0127, F-statistic = 8.5641, P<0.005 and ?-value = 0.8564). In addition, the results showed that there is a long run relationship between fiscal policy and economic growth in Nigeria, and fiscal policy variables have impact on economic growth. Therefore, the study recommended among others that Nigeria government needs to ensure strict compliance with the policies that would increase government revenue and reduce expenditure.

keywords:

Fiscal Policy, Economic Growth, Sustainability, Fiscal Deficit, Nigeria.

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