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Role of Fiscal Policy in Inclusive Growth in Nigeria

Role of Fiscal Policy in Inclusive Growth in Nigeria

 

Abstract: The study examines the role of fiscal policy in inclusive growth in Nigeria using 1980-2013 as the sample period. It employs baseline growth regression model and the Granger causality test to ascertain the longterm impact and the causal relationship between fiscal policy and inclusive growth. Evidence from the study reveal that fiscal policy has a positive and significant impact on inclusive growth. The Granger causality test indicates that a unidirectional causal relationship runs from fiscal policy to inclusive growth in Nigeria. This implies that changes in fiscal policy variables, such as government expenditures, tax revenue and fiscal deficits, can be used to enhance variations in inclusive growth in Nigeria. Based on the findings, the study recommended that government expenditure should be directed to productive investments and infrastructural development with a view to accelerating inclusive growth. Also, government should intensify efforts at mobilizing tax revenue in the country by strengthening tax administration and collection to promote inclusive growth in Nigeria.

JEL classification: H3, H53, H2

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