Fiscal Policy Dynamics and Economic Growth; Sharing the Nigeria Experience

International Journal of Economics and Management Studies

© 2021 by SSRG - IJEMS Journal

Volume 8 Issue 3

Year of Publication : 2021

Authors : Dada, M. A., Posu, S. M. A., Okungbowa, O. G., Oguntegbe, A. A

10.14445/23939125/IJEMS-V8I3P101

How to Cite?

Dada, M. A., Posu, S. M. A., Okungbowa, O. G., Oguntegbe, A. A, "Fiscal Policy Dynamics and Economic Growth; Sharing the Nigeria Experience," SSRG International Journal of Economics and Management Studies, vol. 8,  no. 3, pp. 1-9, 2021. Crossref, https://doi.org/10.14445/23939125/IJEMS-V8I3P101

Abstract:

Economic growth has been a great concern not only among countries aspiring to achieve economic development but also among already developed countries for development sustainability. This study examined the fiscal policy dynamics and economic growth sharing the Nigeria experience. The study is based on historical data covering (1981-2017), fetched from World Development Indicators (WDI) and Statistical Bulletin, a publication of the Central Bank of Nigeria. An autoregressive distributed lag (ARDL) modeling procedure was used to achieve the set objective. The results showed the coefficient of fiscal policy as being negative and significant in the short-run but positive and significant in the long-run. The coefficient of the error correction term significant, negatively signed, and less than the absolute value of 1 in conformity with a priori expectation. The magnitude of the coefficient confirmed a strong long-run equilibrium relationship and short-run dynamics between fiscal policy and economic growth. The result also showed that monetary policy rate and inflation contributed positively and significantly to economic growth. This study deduced that fiscal policy targeting future expansion in economic activities might shrink economic growth initially but enhances it later. The study concluded that fiscal policy affects Nigeria's economic growth positively only in the long-run.

Keywords:

ARDL Model, Fiscal policy, Economic Growth, Development Sustainability, Nigeria

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