ABSTRACT

The study empirically investigated the impact of fiscal policy on economic growth in Nigeria for the period 1986 to 2022. The sub-objectives of the study were to examine whether recurrent expenditure (RECEXP), capital expenditure (CAEXP), transfer payments (TRPT) and federally collected tax (TAX) has significant impact on economic growth. The unit root tests, correlation coefficient and the fully modified least squared (FMOLS) econometric analysis were employed for the analysis of data. The result from the analysis revealed that government recurrent expenditure has significant positive impact on economic growth, capital expenditure (CAEXP) and transfer payments (TRPT) have significant negative impact on economic growth. Those of federally collected tax (TAX) has does not have any significant impact on economic growth in Nigeria. The study therefore conclude that in the determination of economic growth in Nigeria, fiscal policy of government such as recurrent expenditure (RECEXP), capital expenditure (CAEXP) and transfer payments (TRPT) are crucial factors that must not be ignored by government and relevant policy makers in Nigeria. The study recommends among others that, since the result shows a significant positive relationship between recurrent expenditure (RECEXP) and economic growth in Nigeria; this means that the observed increased in government recurrent expenditure has truly translated in concrete terms into growth. Government should therefore ensure that its current revenue should be sustained or brought to an acceptable level such that it will not continue to inhibit economic growth in Nigeria