The Impact Of Fiscal Policy On Private Investment And Economic Growth In Nigeria

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dc.contributor.authorYusuf, Abdul Karim
dc.date.accessioned2022-02-22T07:37:49Z
dc.date.available2022-02-22T07:37:49Z
dc.date.issued2021-03
dc.description.abstractIn the literature neither taxes, government spending nor deficits are robustly correlated with economic growth when evaluated individually. The lack of correlation can emerge from the inability of any single budgetary factor to completely capture the stance of fiscal policy. Confirming the findings of previous literature, thus allowing for a more in-depth disaggregation of fiscal policy variables, this thesis, focused on the pair-wise combination of fiscal indicators, investigated the effect of fiscal policy on private investment and economic growth in Nigeria using annual data from 1980 to 2017. Although studies on the linear relationship between fiscal policy variables and economic growth have been developed in the past, the empirical strategy of the current research departs from this approach and explored the symmetrical and asymmetrical effects of the variables tested using linear and nonlinear ARDL methods to assess the presence or otherwise of any long-term relationship and the direction of causality between them. Based on empirical evidence, direct taxes prompted a significant negative effect on private investment and economic growth, while indirect taxes produced a significant positive impact on private investment and economic growth. Recurrent expenditure decelerated private investment but stimulated growth, while capital expenditure encouraged private investment but suppressed economic growth. For disaggregated public debt, domestic debt was associated with an insignificant positive impact on private investment and a significant adverse effect on growth. External debt had a detrimental effect on private investment and growth. Inflation rate and economic liberalisation both stimulated a strong positive influence on private investment while fiscal stance triggered a significant negative impact on economic growth. Overall, however, the findings of the linear ARDL model were more impressive and showed a better predictive ability suited to the growth dynamics of the Nigerian economy compared to NARDL estimates. The pairwise Granger causality results detected a uni-directional relationship among disaggregated components of government revenue, recurrent expenditure, external debt and economic growth, with causality running from the acknowledged fiscal policy variables to economic growth. An independent relationship was identified between capital expenditure and economic growth while a bi-directional causal relationship was established between domestic debt and economic growth. To achieve sustainable and higher growth rates, the study recommended that fiscal policy management should focus on restoring fiscal stability by expanding the revenue base through an efficient tax administration and collection system, increasing investment in productive sectors of the economy, curtailing excessive deficit financing and productive investment of public borrowing in stimulating private investment and economic growth. The use of Quantile ARDL estimation technique to investigate the asymmetric impact of fiscal policy variables on economic growth using longer period dataset was also suggested for future researches.en_US
dc.identifier.urihttp://hdl.handle.net/123456789/14739
dc.language.isoenen_US
dc.publisherUniversiti Sains Malaysiaen_US
dc.subjecteconomicen_US
dc.subjectInvestmenten_US
dc.titleThe Impact Of Fiscal Policy On Private Investment And Economic Growth In Nigeriaen_US
dc.typeThesisen_US
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