Fiscal Policy as a Tool for Economic Growth: An In-Depth Insight from Nigeria's Economy

This study empirically examines fiscal policy as a tool for economic growth: an in-depth insight from Nigeria’s economy, using an annual time series dataset for the period 2003 to 2023. Secondary data was generated from Central Bank Statistical Bulletin and World Development Indicators (WDI). The study employed Autoregressive Distributed Lag Model for the analysis of the parameters. The variables studies are economic growth, capital expenditure, recurrent expenditure, tax revenue, crude oil revenue, and domestic debt. Ex-post facto research design was adopted for this study. The descriptive results suggest that all the variables have positive mean. This suggests that none of the series has recorded negative mean over the sample period. The implication of the positive mean is that, all the variables in the model recorded positive average growth rate during the period under review. The inferential analysis began with estimation of unit roots and the results revealed that variables were stationary at different orders of integration. Furthermore, the cointegration test shows that there is an evidence of cointegration among the variables. Based on the cointegration result, this study then moves further and applied error correction mechanism of ARDL approach so as to generate the estimated long-run and short-run results. Based on the estimate this study reveals that there is negative but statistically significant relationship between domestic debt and economic growth. There is positive but statistically significant relationship between capital expenditure and economic growth. There is positive but statistically significant relationship between recurrent expenditure and economic growth. There is positive but statistically significant relationship between tax revenue and economic growth. There is positive but statistically insignificant relationship between crude oil revenue and economic growth. This study recommends the need for government to adopt fiscal mechanism that will encourage increase in revenue through tax and ensure that more of government spending should be channeled to area of economic growth.