Fiscal Policy and Poverty levels: Empirical evidence from Nigeria

Abstract

This study examines the determinants of poverty levels in the Nigerian economy from 1990 to 2021.This was aimed at ascertaining how aggregate government spending (GEXP), aggregate public debt (PUD) and tax revenue (TXR) has stimulated the poverty levels in Nigeria. Historical data was collated and estimated employing the ARDL form of Ordinary Least Squares (OLS) technique. The empirical results indicate that all selected fiscal policy variables were significant on poverty levels. While both aggregate public debt and tax revenue increased poverty levels, government spending exert significant negative impacts on the poverty levels in Nigeria. On the basis of the findings of this study, the following recommendations are made. Government should sustain and increase its current budgetary spending as they have been seen to reduce the incidence of poverty in the country. Since aggregate debt cause poverty in Nigeria, meaning that policy intervention should focus on the effective management of the borrowed funds in order to drive the process of economic development. Finally, tax revenue should be more of progressive in Nigeria. The current universal tax policy of government has been proven to cause poverty so there is need to reconsider it for more progressive based tax system

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