FISCAL PERFORMANCE AND ECONOMIC GROWTH IN NIGERIA: A DYNAMIC OLS APPROACH

Economics and Finance

This study employs the dynamic OLS model to investigate the nexus between government fiscal performance and economic growth in Nigeria. More specifically, the study examines the impact of government revenue performance, government expenditure performance, and public debt performance on real GDP using yearly time series data for the period from 1981 to 2022. Our empirical evidence shows that both government revenue performance and expenditure performance have a positive but not statistically significant effect on economic growth. On the other hand, public debt performance has a negative but statistically insignificant impact on economic growth. Based on these empirical findings, it is concluded that the relationship between government fiscal actions and economic growth is not governed by endogenous growth theory. Also, although government fiscal performance is not a significant determinant of economic growth in Nigeria, there is tendency for further increase in total public debt to cause an overhang problem in the Nigerian economy. Hence, there is urgent need to increase both the revenue base of the economy and the productive government spending at all levels of government.

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