Oil plays an important role in the economic growth of Nigeria given the fact that over seventy per cent (70%) of her Gross National Product comes from oil and natural gas. The essence of this paper is to study the impact of the fluctuation in oil prices on both the government revenue and government expenditure in Nigeria as an emerging oil export based economy. Four theoretical hypotheses: Revenue (tax) – Spending hypothesis; Spend – Revenue (tax) hypothesis; Fiscal synchronization hypothesis; and Fiscal neutrality/institutional separation hypothesis have been identified in the literature to explain the relationship between government revenue and expenditure. The debate on the existence of a relationship between government revenue and government expenditure has remained inconclusive in nature. This paper intends to know how fluctuation in oil price affects the relationship between government revenue and expenditure in Nigeria. We intend to achieve this objective by using Granger causality test and Vector Error Correction (VEC) model to analyse monthly data from Nigerian economy from 1970 to 2014. The result of the analyse is expected to have significant policy implications for virtually all the various economic agents, for instance, policy makers among others will find the result useful as it will provide platform for good policy formulation that will aid fiscal management in the economy
