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Causality of Fiscal Policies and Per Capita Income Development: Evidence from the Nigerian Economy

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  • Suoye Igoni
  • Itotenaan Henry Ogiri

Abstract

The growing dependency among the working population of Nigerians and basic infrastructures decay despite the upward budgetary allocation initiated to this study. The purpose of this study is to examine the response of Nigerians welfare to budgetary increase. The study, therefore, measures the causality of selected Fiscal policies- Government Capital Expenditure (GCX) and Government Recurrent Expenditure (GRX), and its prevailing development on per capita income (PCI) development in the Nigerian economy. The study employed data sourced from the Central Bank of Nigeria over the period 1981-2016. The Augmented Dickey-Fuller (ADF) and Granger Causality tests were applied. The results of the ADF test shown are stationary at first levels differenced. The results of the Granger Causality test indicate government recurrent expenditure (GRX) significantly promotes per capita income (PCI). The study concludes that GRX constitutes a significant variables policy that predicts per capita income development. The study recommends that the Federal Ministry of finance provide employment and business credits assistance to reduce the level of the unemployment rate. Recurrent expenditures like wages and salaries as well as transfer payments should be prompt to help invigorate small businesses in Nigeria.

Suggested Citation

  • Suoye Igoni & Itotenaan Henry Ogiri, 2020. "Causality of Fiscal Policies and Per Capita Income Development: Evidence from the Nigerian Economy," Economy, Asian Online Journal Publishing Group, vol. 7(1), pages 19-24.
    • Handle: RePEc:aoj:econom:v:7:y:2020:i:1:p:19-24:id:1562
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