Fiscal deficit in an oil dependent revenue country and selected macroeconomic variables: a time series analysis from Nigeria (1981-2015)

In this paper, we determine the effect of fiscal deficit on selected macroeconomic variables in Nigeria by specifically evaluating the effect of fiscal deficit on gross domestic product, money supply and inflation. To achieve these objectives, we employed various econometric techniques such as unit root test, Johansen co-integration, granger causality test in which variations in gross domestic product; money supply and inflation were regressed on fiscal deficit and exchange rate using time series data from 1981 to 2015. Secondary data casing the time frame were collected from Central Bank of Nigeria statistical bulletin. The result of the analysis reveals that fiscal deficit has no significant effect on gross domestic product, money supply and inflation in Nigeria. The finding also shows that there is a positive insignificant relationship between fiscal deficit and gross domestic product which measure the growth of an economy at given period of time. This is in line with the Keynesian postulation of the existence of positive relationship between fiscal deficit and macroeconomic variables. Based on the findings, government should allocate and effectively monitor funds sourced as a result of fiscal deficit to providing critical economic infrastructures such as electricity, access road, health, communication among others to reap the benefits associated with fiscal deficit. Monetary policy should be structured in such a way as to compliment fiscal policy so that the level of inflation would be lowered whenever government relies majorly on fiscal deficit as an instrument of fiscal policy

FISCAL DEFICIT IN AN OIL DEPENDENT REVENUE COUNTRY AND SELECTED MACROECONOMIC VARIABLES: A TIME SERIES ANALYSIS FROM NIGERIA (1981-2015)

In this paper, we determined the effect of fiscal deficit on selected macroeconomic variables in Nigeria by specifically evaluating the effect of fiscal deficit on gross domestic product, money supply and inflation. To achieve these objectives, we employed various econometric techniques such as unit root test, Johansen co-integration, granger causality test in which variations in gross domestic product, money supply and inflation were regressed on fiscal deficit and exchange rate using time series data from 1981 to 2015. Secondary data casing the time frame were collected from Central Bank of Nigeria statistical bulletin. The result of the analysis revealed that fiscal deficit has no significant effect on gross domestic product, money supply and inflation in Nigeria. The finding also shows that there is a positive insignificant relationship between fiscal deficit and gross domestic product. This is in line with the Keynesian postulation of the existence of positive relationship between fiscal deficit and macroeconomic variables. Based on the findings, government should allocate and effectively monitor funds sourced as a result of fiscal deficit to providing critical economic infrastructures such as electricity, access road, health, communication among others to reap the benefits associated with fiscal deficit. Monetary policy should be structured in such a way as to compliment fiscal policy so that the level of inflation would be lowered whenever government relies majorly on fiscal deficit as an instrument of fiscal policy.  Article visualizations

FISCAL DEFICIT IN AN OIL DEPENDENT REVENUE COUNTRY AND SELECTED MACROECONOMIC VARIABLES: A TIME SERIES ANALYSIS FROM NIGERIA (1981-2015)

In this paper, we determine the effect of fiscal deficit on selected macroeconomic variables in Nigeria by specifically evaluating the effect of fiscal deficit on gross domestic product, money supply and inflation. To achieve these objectives, we employed various econometric techniques such as unit root test, Johansen co-integration, granger causality test in which variations in gross domestic product; money supply and inflation were regressed on fiscal deficit and exchange rate using time series data from 1981 to 2015. Secondary data casing the time frame were collected from Central Bank of Nigeria statistical bulletin. The result of the analysis reveals that fiscal deficit has no significant effect on gross domestic product, money supply and inflation in Nigeria. The finding also shows that there is a positive insignificant relationship between fiscal deficit and gross domestic product which measure the growth of an economy at given period of time. This is in line with the Keynesian postulation of the existence of positive relationship between fiscal deficit and macroeconomic variables. Based on the findings, government should allocate and effectively monitor funds sourced as a result of fiscal deficit to providing critical economic infrastructures such as electricity, access road, health, communication among others to reap the benefits associated with fiscal deficit. Monetary policy should be structured in such a way as to compliment fiscal policy so that the level of inflation would be lowered whenever government relies majorly on fiscal deficit as an instrument of fiscal policy

Fiscal Policy and Stock Market Development in an Emerging West African Economy: The Case of Nigeria

Purpose: This article presents a study on the effect of fiscal policy on stock market development in an emerging West African economy with an emphasis on Nigeria for the period of 1986 to 2018. Specifically, we evaluated the effect of fiscal deficit on all share index including government total expenditure on market capitalization ratio, the value of stock traded, and turnover ratio using data from the Central Bank of Nigeria (CBN) and Nigerian Stock Exchange (NSE). Methods: The Auto-regressive Distributive Lag (ARDL) was the estimation technique employed in ascertaining the nature of the short-run relationship between fiscal policy and stock market development indices, whereas the effect of fiscal policy on stock market development was actualized under the granger causality analysis. Results: The result of the analysis revealed that fiscal deficit has no significant effect on all share index; government total expenditure has no significant effect on stock market capitalization ratio; government total expenditure has a significant effect on the value of stock traded ratio; government total expenditure has no significant effect on the stock market turnover ratio. Implication: Government should implement its fiscal policies to carefully accommodate the development of the stock market, as changes in fiscal policy affect the overall activities in the market and ultimately the economy