Asymmetric impact of fiscal policy variables on economic growth in Nigeria

November 22, 2021 Siddhant Goyal

Date of Publication: Jun 19, 2021

Author: Abdulkarim Yusuf & Saidatulakmal Mohd

Summary:

The study used time series data from 1980 to 2018 and the Nonlinear ARDL approach to analyse the asymmetric impacts of fiscal policy on economic growth in Nigeria. The bounds test findings indicated a distinctive nonlinear co-integrating link between fiscal policy variables and economic growth. The empirical findings demonstrated that growth responds asymmetrically to changes in recurrent expenditure in both the long and short run. Economic growth responded symmetrically to changes in petroleum profit tax, customs and excise levies, which was significant in both the long and short run. Variations in domestic and external debt had an uneven impact on growth in the long-run and a balanced relationship in the short-run. Fiscal improvements were advised to broaden the revenue base through an efficient tax administration and collection system, enhance expenditure on vital infrastructure, eliminate unnecessary deficit financing, and invest productively in public debt to stimulate private investment and inclusive growth.

Link to Full Reading:

https://www.tandfonline.com/doi/full/10.1080/20430795.2021.1927388