Open AccessCausal Relationship between Fiscal Policy and Private Investment in Nigeria for the period 1986 -2019
Author(s) -
Kenechukwu Origin Chukwu,
Chidi-Okeke Chioma Nnenna,
Chris-Ejiogu Uzoamaka Gloria,
Awe Stanley Kalu
Publication year - 2021
Publication title -
asian research journal of arts and social sciences
Language(s) - English
Resource type - Journals
ISSN - 2456-4761
DOI - 10.9734/arjass/2021/v14i230234
Subject(s) - granger causality , private sector , investment (military) , economics , revenue , restructuring , government revenue , order (exchange) , economic policy , tax revenue , business , finance , macroeconomics , economic growth , politics , political science , law , econometrics
This study investigated the causal relationship between fiscal policy and private investment in Nigeria (1986-2019) using secondary data from Statistical bulletin of Central Bank of Nigeria. The research work used the Granger Causality techniques to test the causal relationship between the independent variables (Tax revenue, Oil revenue, Total expenditure and Public debt) on the dependent variable (Private Investment) while VAR was used to test the short run relationship. The study found that fiscal policy instruments granger causes private investment in Nigeria within the period of the study. The study therefore advocates that Government should as necessity fully liberalized or privatized NNPC and the Power sector as these critical sectors will help the growth of the private sectors and reduce unemployment in the country. Nigerian Government ought to increase its spending on infrastructure, especially capital projects in the economy in order to bridge infrastructure gap in the country. Provision of tax incentives to private sectors by the Government should be encouraged, as this will help the growth of private investment in the country. Also, restructuring of the economy by manufacturing what we need should be encouraged by government because exporting commodity (raw material) means exporting jobs.