ASSESSING THE EFFECTIVENESS OF FISCAL POLICY IN STIMULATING NIGERIA’S REAL ECONOMY
Authors: Ifeanyi Chukwuma Nwankwo
DOI: 10.5281/zenodo.17423160
Published: October 2025
Abstract
<p>Theoretically, the Keynesian’s view fiscal policy as a tool to fine-tune aggregate expenditures and protect people from turbulent swing in their well-being. Fiscal policy entails the use of government expenditures and tax policies to stimulate or contract macroeconomic activities. Government intervention through fiscal policy is geared towards the achievement of macroeconomic stability and real growth. The study examined fiscal policy instruments and the Nigerian real sector. The variables of capital expenditure, recurrent expenditure, government borrowing and taxation were regressed on the Nigerian real sector. The study adopted an ex-post facto research design because the data for the study are secondary data which were sourced from Central Bank of Nigeria (CBN), Statistical Bulletin and Statement of Accounts, and were analyzed with Ordinary Least Square (OLS). The available evidence showed that capital expenditure, recurrent expenditure and taxation have positively and significantly enhanced the real gross domestic product. Again government borrowing has negatively and insignificantly affected the real gross domestic product. following the available theories, empirical and the result of the analysis, we submit that fiscal policy have positive effect on the real sector in Nigeria and has helped to improve economic growth and development in Nigeria within the period covered by the study. Amongst the recommendations is that borrowing should be contracted solely for economic reasons and not for social or political reasons. Government should use an expansionary fiscal policy to encourage increase in investment in Nigeria</p>
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