The Interplay between Fiscal Policy, Inflation and Economic Growth in Nigeria: An ARDL Approach

Taiwo Kolade Opayinka
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Taiwo Kolade Opayinka: Department of Economics, Federal University, Oye Ekiti, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 15, 259-274

Abstract: This study examined the impact of fiscal policy and inflation on economic growth in Nigeria using Auto Regressive Distributed Lag Model (ARDL). By analyzing data on key variables using time series from 1980-2023, the objective of the study is to find the impact of fiscal policy and inflation on economic growth in Nigeria. The finding revealed there is short run relationship between fiscal policy and inflation on economic growth in Nigeria. While that of fiscal policy is positive, the inflation is negative. Also, the long run relationship highlighted negative insignificant between fiscal policy and economic growth while inflation and economic growth showed positive insignificant relationship. The study concluded that fiscal policy and inflation play pivotal roles in shaping Nigeria’s economic trajectory. Effective fiscal management fosters growth, but its success is often undermined by high inflation and external shocks. The study recommended allocating more resources to education, and infrastructure to support long-term productivity and growth. Furthermore, diversifying the economy can mitigate external shocks and stabilize fiscal revenues.

Date: 2024
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