Tag Archives: capital; expenditure; output; recurrent; revenue

Reassessing the Link between Fiscal Policy and Economic Growth in Nigeria (Published)

This study examined the link between fiscal policy and economic growth in Nigeria using data from 2001 to 2018. The study adopted real gross domestic product (RGDP) as proxy for economic growth and the dependent variable, while total revenue (TREV), recurrent expenditure (REXP), and capital expenditure (CEXP) were used as proxies for fiscal policy and the independent variables. Time series secondary data for the variables were sourced from annual reports of Central Bank of Nigeria (CBN) Statistical Bulletins and National Bureau of Statistics covering the period 2001 to 2018. The study employed descriptive statistics and multiple regression technique based on the E-views 9.0 software as methods of data analysis. The empirical results showed that total revenue and capital expenditure had insignificant negative effect on real gross domestic product, proxy for economic growth, while recurrent expenditure had a significant positive link with real gross domestic product. On the whole, the findings of this study established that the selected fiscal policy variables had mixed effect on economic growth. This finding is against prior expectation because fiscal policy is expected to play an important role in sustainable economic growth. However, this is not surprising because a high per cent of the nation’s budget is allocated to recurrent expenditure, especially the huge overhead costs of running government business as opposed to the much lower allocation to capital expenditure which should have been the catalyst for growth. Based on the findings, the study recommended that government should review annual budgetary allocations in favour of capital expenditure and cut down on administrative expenses in order to put the economy on a path of steady growth.

Keywords: capital; expenditure; output; recurrent; revenue