Fiscal Policy and Economic Growth in Nigeria from 1970 Till 2011

| |

Home Instructors Journals ContactUs | |

Home | Instructors | Journals | Contact Us | | JOURNAL OF RESEARCH IN NATIONAL DEVELOPMENT VOLUME 5 NO 2, DECEMBER, 2007FISCAL POLICY AND NIGERIAN ECONOMIC GROWTHOmitogun Olawunmi and Ayinla, Tajudeen A.
Department of Economics
Olabisi Onabanjo University, Ago-Iwoye Abstract
This paper has examined empirically the contribution of fiscal policy in the achievement of sustainable economic growth in Nigeria. Using the Solow growth model estimated with the use of Ordinary Least Square method, it was found that fiscal policy has not been effective in the area of promoting sustainable economic growth in Nigeria. Although, the finding seems invalidating the Keynesian postulation of the need for an active policy to stimulate economic activities, however, factors such as policy inconsistencies, high level of corruption, wasteful spending, poor policy implementation and lack of feedback mechanism for implemented policies evident in Nigeria which are indeed capable of hampering the effectiveness of fiscal policy have made it impossible to come up with such a conclusion. To put the Nigerian economy, therefore, along the path of sustainable growth and development, the government must put a stop to the incessant unproductive foreign borrowing, wasteful spending and uncontrolled money supply and embark upon specific policies aimed at achieving increased and sustainable productivity in all sectors of the economy.
Keywords: Fiscal Policy, Economic Stabilization, Economic Growth
Introduction
The achievement of macroeconomic goals namely full employment, stability of price level, high and sustainable economic growth, and external balance, from time immemorial, has been a policy priority of every economy whether developed or developing given the susceptibility of macroeconomic variables to fluctuations in the economy.. The realization of these goals undoubtedly is not automatic but requires policy guidance. This

References: Adenikinju, A and Olofin, S. O (2000) Economic Policy and Manufacturing Sector Growth Performance in Africa. The Nigeria Journal of Economic and Social Studies, Volume 42, No 1 pages 1 -14. Aigbokhan, B. E (1996) Government Size and Economic Growth: The Nigeria Experience. Beyond Adjustment: Management of the Nigeria Economy. Annual Conference Proceedings, Nigerian Economic Society. Ariyo, A. (1996) Economic Reform and Macroeconomic Management in Nigeria. Ibadan:Ibadan University Press Ltd Bogunjoko, J Busari, D.T. (2004). Government Expenditure in Nigeria under Alternative Exchange Rate Regimes. Leading Issues in Macroeconomic Management and Development., Ibadan: NES and Daily Graphics Busari, O Cooper, J.P. and Fisher, S (1973): Stabilization Policy and Lags. Journal of Political Economy, Volume 81, No 1. Easterly, W. and Fischer, S. (1990). The Economic of Government Budget Constraint. The World Bank Observer, Vol. 5, No. 2, July 1990. Easterly, W. and Schmidt-Hebbel, K. (1991). The Macroeconomics of Public Sector Deficits: A Synthesis. The World Bank Working Paper Series No. 775, Oct. 1991. Egwaikhide, F.O. (1998): Budget Deficit and Macroeconomic Management in Nigeria. In Post – Structural Adjustment Programme. The Nigerian Journal of Economic and Social Studies, Vol. 38 Nos. 1, 2 and 3. Ekpo, A. H. (1994): Public Expenditure and Economic Growth in Nigeria, 1960 – 1992. Final Report :African Economic Research Consortium (AERC), Nairobi, Kenya. Fakiyesi, T Folorunso, B. A and Abiola, A. G. (2000): The Long – run Determinants of inflation in Nigeria (1970 - 1998). The Nigerian Journal of Economic and Social Studies, Vol 42, Vol. 1 pages 37 - 52. Fullerton, T Garba, A. G. (1995): The Determinants of Nigerian Federal Government Expenditure, 1970 – 1993. Final Report, African Economic Research Consortium (AERC), Research Workshop, Nairobi. Jhingan M Komolafe, O. S. (1996): Exchange Rate Policy and Nigeria’s External Sector Performance: Implications for the future. Nigeria Journal of Economics and Social Studies, Vol. 38 No 1, page 65 – 85. Levaice Rosalind and Rebman Alexander (1976). Macroeconomics: An Introduction to Keynesian – Neoclassical Controversies (Second Edition), Hong –Kong; Pintail Studios Ndung’u, Njuguna ( 1995 ) Ogiogio, G. O (1996). Planning Horizon, Government Expenditure and Economic Growth in Nigeria. in Economic Reform and Macroeconomic Management in Nigeria, Ariyo, (ed )Ibadan: University Press, Ibadan. Olaniyan, Olanrewaju (1997). Macroeconomic Policy Framework for Poverty Alleviation. NES 1997 Annual Conference, p 214-217. Olashore, Oladele (1991). Challenges of Nigeria’s Economic Reform. Ibadan: Fountain Publications. Philips, A. O (1997): Nigerian Fiscal Policy, 1998 -2010. Nigerian Institute of Social Economic Research (NISER), Monograph Series No. 17, Ibadan. Ram, R Tanzi, V., M.I. Blejer and M.O. Teijeiro (1987). Inflation and the Measurement of Fiscal Deficits. IMF Staff Papers 34 (Dec.), 711-738. Tchokote, Joseph (2001) World Bank (1996): India: Five years of Stabilization and Reforms and the Challenges Ahead. The Work Bank. | |