FISCAL POLICY AND ECONOMIC GROWTH IN NIGERIA: EMPHASIS ON VARIOUS COMPONENTS OF PUBLIC EXPENDITURE

Abstract

This paper aims at determining the impact of various components of fiscal policy on the Nigerian economy. We simply used descriptive statistics to show contribution of government fiscal policy to economic growth, ascertain and explain growth rates, and an OLS in a multiple form to ascertain the relationship between economic growth and government expenditure components after ensuring data stationarity. Findings reveal that total government expenditures have tended to increase with government revenue, with expenditures peaking faster than revenue. Investment expenditures were much lower than recurrent expenditures evidencing the poor growth in the country's economy. Hence there is some evidence of positive correlation between government expenditure on economic services and economic growth. An increase in budgetary allocation to economic services will lead to an enhancement in economic stability. Therefore, in public spending, it is important to note that the effectiveness of the private sector depends on the stability and predictability of the public incentive framework, which promotes or crowds in private investment.