Obiora Roselyn Ukamaka
Department of Banking And Finance, Federal Polytechnic Oko
08139707910
rosil4real@yahoo.co.uk
This paper investigated the effect of fiscal policy on the economic growth of Nigeria. The study was undertaken because, despite the various fiscal policy measures embarked upon by the federal government of Nigeria, the economy is yet to attain an acceptable level of Macroeconomic stability. According to Tanzi and Zee (1997) there are three cardinal indicators of fiscal policy- government expenditure, taxes and deficits. Specifically, this paper sought to ascertain the effect of these indicators on economic growth in Nigeria. The study used time series data covering a period of 32years (1986-2018) extracted from CBN statistical bulletin and adopted Ordinary Least Square Regression model for data analysis. The findings revealed that government expenditure had a positive effect on the Real Gross
Domestic Product of Nigeria and it is statistically significant, Government Tax receipt had a positive effect on the RGDP but it is not statistically significant, fiscal deficit had a negative and significant effect on the economic growth of Nigeria during the period under review. The paper concluded that these fiscal policy variables can only lead to economic growth if they are used productively. The paper recommended too, that the prerequisite for achieving fiscal policy objectives is curtailing corruption, corruption hinders economic growth. To be free from the taints of corruption there should be stricter adherence to the tenets of the Fiscal Responsibility Acts which is essentially aimed at ensuring transparency and accountability in the ways public resources are managed.
Keywords: Fiscal Policy, Government Expenditure, Taxation, Deficit Budget, Economic Growth.