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Influence of Fiscal Policy on Gross Domestic Investment (GDI) in Nigeria

Author

Listed:
  • Sebastian O. Uremadu*

    (Professor of Banking and Finance, Department of Banking and Finance, College of Management Sciences(COLMAS), Michael Okpara University of Agriculture, Umudike Umuahia, Abia State, Nigeria)

  • Kingsley O. Onyele

    (Department of Banking and Finance, College of Management Sciences, Michael Okpara University of Agriculture, Umudike, Umuahia, Abia State, Nigeria)

Abstract

The study analyzed influence of fiscal policy on gross domestic investments in Nigeria. Specifically, the influence of government revenue, government expenditure and government debt on gross domestic investments was investigated. Data spanning 36 years, from 1981 to 2017, was used for the study’s tests and analysis. For the data analysis, unit root test results showed that the data were of mixed integration, hence the autoregressive distributed lag (ARDL) approach to regression analysis was applied. The ARDL bounds test revealed that fiscal policy and domestic investments in Nigeria had long-run relationship. It was also revealed that government revenue had negative and significant influence on gross domestic investments, while government expenditure and government debt both had positive influence on domestic investments with government expenditure been significant. As such, the paper recommended, among other things, that revenue from sources other than tax should be encouraged, through better means of accelerating agricultural productivity to cushion the dwindling revenue from Nigerian oil sector as this would help to accelerate non-tax revenue in the years ahead.

Suggested Citation

  • Sebastian O. Uremadu* & Kingsley O. Onyele, 2019. "Influence of Fiscal Policy on Gross Domestic Investment (GDI) in Nigeria," Sumerianz Journal of Social Science, Sumerianz Publication, vol. 2(7), pages 74-85, 07-2019.
    • Handle: RePEc:sum:sjossm:2019:p:74-85
    DOI: sumerianz.com/?ic=journal-home&journal=28
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    References listed on IDEAS

    as
    1. Checherita-Westphal, Cristina & Rother, Philipp, 2010. "The impact of high and growing government debt on economic growth: an empirical investigation for the euro area," Working Paper Series 1237, European Central Bank.
    2. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    3. Fakhri Hasanov & Fuad Mammadov & Nayef Al-Musehel, 2018. "The Effects of Fiscal Policy on Non-Oil Economic Growth," Economies, MDPI, vol. 6(2), pages 1-21, April.
    4. Damian J. Nwankwo & Chris U. Kalu & Mary O. Chiekezie, 2017. "Fiscal Policy-Economic Growth Correlates: Further Evidence from Nigeria Economy," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(1), pages 1-11, January.
    5. Kappel Stanislav & Janků Jan, 2014. "Integration of Monetary and Fiscal Policy of the Countries of the Visegrad Group," Review of Economic Perspectives, Sciendo, vol. 14(3), pages 197-213, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Fiscal policy; Gross domestic investments; Government expenditure; Fiscal deficit; Government revenue;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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