The Relationship Between Fiscal Policy And Economic Growth In Nigeria (1991 - 2005)

Abstract

The study evaluated the effects of fiscal policy on the economic growth in Nigeria for the period 1991 to 2005. The study examined the contributions of tax revenue, government debts, government recurrent expenditure, government capital expenditure, government recurrent budget, and government capital budget to the gross domestic product. Using data both from the Central Bank of Nigeria Annual Reports and Accounts and Statistical Bulletin, we utilized the multiple regressions for the analysis of data. The result indicated that a significant relationship exists between the explanatory variables taken together and gross domestic product, and no significant relationship between the specific explanatory variables contributing to gross domestic product except government recurrent and capital expenditures. On the average 99% of the variations in GDP is explained by variables in the model. The paper concluded that the achievement of economic growth through fiscal policy in Nigeria is a mirage as a result of inconsistencies in government policies, wasteful spending, corruption and poor policy implementation. Therefore, it was recommended among others that government should avoid unnecessary borrowings; ensure that policies are implemented and inconsistencies are minimized; leakages and corruption in the country are tackled with all level of seriousness; and above all, the application of fiscal transparency and responsibility in the running of government business.