Impact of Fiscal Policy on Economic Performance in Nigeria: 1981-2020

Abstract

This study examined the impact of fiscal policy on economic performance in Nigeria (1981-2020). The Augmented Dickey-Fuller unit root test was employed to establish the stationarity of the variables, Johansen co-integration was used to determine the existence of a long-run relationship between fiscal policy and economic performance while ECM was employed to determine the speed of adjustment of the variable to long-run equilibrium at one lag selected. The findings were that there was evidence of a long-run equilibrium relationship between fiscal policy and economic performance in Nigeria. It was found that government total expenditure has a positive and significant long-run impact on economic performance proxies real GDP, human development
index (HDI) but negative impact on poverty level in Nigeria while on the other hand, public debt has a positive and significant impact on human development index but positive and insignificant impact on poverty level in Nigeria. Lastly, public debt has a negative impact on the RGDP in Nigeria. From the conclusion, the recommendation made included; anti-corruption agencies like the Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices Commission (ICPC) should be merged to avoid wastages in government expenditure.