The rationale of this study is to examine the effect of fiscal policy variables on economic growth in Nigeria. The fiscal policy variables considered in the study include government gross fixed capital formation, tax, government expenditure, budget deficit as well as external debt. The study covered the period 1986 to 2012. Unit roots of the time series were examined using the Augmented Dickey-Fuller technique after which the co-integration test was conducted using the Johansen Co-integration Approach. Error-correction models were estimated to take care of short-run dynamics. Over all, the results indicate that fiscal policy has a long-run relationship with Nigeria economic growth confirmed by the co-integration test. the study further reveals that government expenditure and gross fixed capital formation from government has positive and significant impact on Nigeria economic growth while budget deficit has negative and significant effect on Nigeria economic growth and concluded that that fiscal policy has the ability to induced economic growth in Nigeria through government expenditure and investment in the economy while ensuring that fiscal discipline are practised by keeping to budgetary provisions and minimising budget deficit .
Abata, M.A, Kehinde,J.S and Bolarinwa, S.A. (2012) Fiscal/Monetary Policy and Economic Growth in Nigeria: A Theoretical Exploration, International Journal of Academic Research in Economics and Management Sciences,1(5): 75-88.
Abdullah, H, Habibullah, M.S and Baharumshah, A.Z. (2009) The Effect of Fiscal Variables on Economic Growth in Asian Economies: a Dynamic Panel Data Analysis, International Journal of Business and Management, 4(1): 56-69
Adefeso, H.A and Mobolaji, H.I (2010). The Fiscal – Monetary Policy and Economic Growth in Nigeria: Further Empirical evidence. Pakistan Journal of Social Sciences, 7 (2): 137-142.
Akor, M.E. (2001) The Nigerian Economy: a selected study, Jos. Macedonia Trust International.
Audu,N.P. (2012). The Impact of Fiscal Policy on the Nigerian Economy. International Review of Social Sciences and Humanities, 4(1): 142-150.
Barro, R. (1990). Government Spending in a Simple model of Endogenous Growth. Journal of Political Economy, 98, S103 - S125.
Barro, R.J. and Sala-I-Martin, X. (1995). Economic Growth, McGraw-Hill: New York
Baunsgard, T. (2003). Fiscal Policy in Nigeria: Any Role for Rules. International Monetary Fund Working Paper.
Devarajan, S., Swaroop, V. and Zou, H. (1996). The Composition of Public Expenditure and Economic Growth. Journal of Monetary Economics, 37(2), 313-344.
Diego, M. (2005) Fiscal policy and growth: The case of Spanish regions, Economic Issues, Vol. 10, Part 1, March 2005.
Ebimobowei, A. (2012) The Relationship Between Fiscal Policy and Economic Growth in Nigeria (1991 - 2005), International Journal of Economic Development Research and Investment, 1( 2 & 3): 37-48
Ekpo, A. (1994). Public expenditure and economic growth in Nigeria 1960 to 1992: Final Report. Nairobi: AERC.
Gheorghita, M. and Marius, S. (2013) The Impact of Fiscal Policy upon Economic Growth in the European Union, International Journal of Education and Research,1(10): 1-12
Granger C.W.J. (1986), ‘Developments in the study of integrated economic variables’, Oxford Bulletin of economics and statistics, 48 (2): 213-28.
Granger, C. and Newbold P. (1974). Spurious Regressions in Econometrics. Journal of Econometrica, 2, 111 - 120.
Hadiwibowo, Y. (2010) Fiscal Policy, Investment and Long-Run Economic Growth: Evidence from Indonesia, Asian Social Science, 6(9): 3-11
Ilegbinosa1, I.A (2009) An Appraisal of Fiscal Policy Measures and its Implication for Growth of the Nigerian Economy: 1970-2009, Advances in Management & Applied Economics, vol. 3, no.4, 2013, 193-204
Isaksson, A. (2001) Financial liberalization, foreign aid and capital mobility: Evidence from developing countries, Journal of International Financial Markets, Institutions and Money, 11(2001), 309-338.
Longe, J.B. (2005). That Nigerians shall not Die poor: The Quest to save the poor. A.A.U Inaugural lecture series 24.
Medee, P.N and Nembee, S.G (2011). Econometric Analysis of the impact of Fiscal Policy Variables on Nigeria's Economic Growth (1970 - 2009). International Journal of Economic Development Research and Investment, 2(1):171-183
Ocran, M. K. (2009). Fiscal Policy and Economic Growth in South Africa. A paper presented at the Centre for the Study of African Economies, Conference on Economic Development in Africa, St. Catherine's College, Oxford University, U.K. March 22 - 24,2009. www.case.ox.ac.uk/conference/2009
Rena, R. and Kefela, G.T. (2011). Restructuring a fiscal policy Encourages Economic Growth – a Case of Selected African Countries, Journal of Economics and Business, 14(2):23-39
ISMAILA, M., & IMOUGHELE, L. E. (2015). Behavioral Pattern of Fiscal Policy Variables and Effects on Economic Growth: An Econometric Exposition on Nigeria. International Journal of Academic Research in Business and Social Sciences, 5(2). 254-266.
Copyright: © 2015 The Author(s)
Published by Knowledge Words Publications (www.kwpublications.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
