Influence of Fiscal Policy on Gross Domestic Investment (GDI) in Nigeria

Sebastian O. Uremadu* and Kingsley O. Onyele
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Sebastian O. Uremadu*: Professor of Banking and Finance, Department of Banking and Finance, College of Management Sciences(COLMAS), Michael Okpara University of Agriculture, Umudike Umuahia, Abia State, Nigeria
Kingsley O. Onyele: Department of Banking and Finance, College of Management Sciences, Michael Okpara University of Agriculture, Umudike, Umuahia, Abia State, Nigeria

Sumerianz Journal of Social Science, 2019, vol. 2, issue 7, 74-85

Abstract: The study analyzed influence of fiscal policy on gross domestic investments in Nigeria. Specifically, the influence of government revenue, government expenditure and government debt on gross domestic investments was investigated. Data spanning 36 years, from 1981 to 2017, was used for the study’s tests and analysis. For the data analysis, unit root test results showed that the data were of mixed integration, hence the autoregressive distributed lag (ARDL) approach to regression analysis was applied. The ARDL bounds test revealed that fiscal policy and domestic investments in Nigeria had long-run relationship. It was also revealed that government revenue had negative and significant influence on gross domestic investments, while government expenditure and government debt both had positive influence on domestic investments with government expenditure been significant. As such, the paper recommended, among other things, that revenue from sources other than tax should be encouraged, through better means of accelerating agricultural productivity to cushion the dwindling revenue from Nigerian oil sector as this would help to accelerate non-tax revenue in the years ahead.

Keywords: Fiscal policy; Gross domestic investments; Government expenditure; Fiscal deficit; Government revenue (search for similar items in EconPapers)
JEL-codes: E2 E31 E5 E65 F43 H3 (search for similar items in EconPapers)
Date: 2019
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