Fiscal Policy and Economic Development in Nigeria (1960 - 2011)

Abstract

This study investigated the impact of fiscal policy measures on economic development in Nigeria. The Augmented Dickey-Fuller and Phillips-perron unit root test were first conducted. The cointe gration test was then performedusing Johansen Maximum Likelihood procedure. The granger causality test, the impulse response test, and then the variance decomposition test were performed. The collective results reveal that fiscal policy measures have not been effective in the development of the Nigerian economy when compared to monetary policy measures. Based on this,
it was recommended, amongst others, that fiscal discipline, through prudent accountability, efficiency in revenue generation and above all, spending according to domestic demands, should be ensured in order to avoid economic decline in Nigeria.

Key Word: Fiscal policy, Economic Development