Exploring the Nonlinear Relationship between Fiscal Policy and Economic Growth in Uganda: A NARDL Perspective

Kyewaalabye Mudasiru and William Epiaka

Applied Economics and Finance, 2026, vol. 13, issue 1, 68-85

Abstract: This study examines the asymmetric effects of fiscal policy on economic growth in Uganda using annual data from 1983 to 2020 obtained from the Uganda Revenue Authority and the World Bank. Employing the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests, the results reveal a mixture of I(0) and I(1) variables, justifying the use of the NARDL bounds testing approach to cointegration. The findings confirm a long-run cointegrating relationship among the variables and demonstrate significant asymmetric effects of fiscal policy, particularly government expenditure and tax revenue on economic growth in the long run, while short-run asymmetry is mainly observed in tax revenue, with overall fiscal responses appearing symmetric. These results imply that positive and negative fiscal shocks have differing impacts on growth over time, leading to the recommendation that fiscal policy be strategically directed toward productive investments, improved private sector support, and the creation of an enabling environment to accelerate sustainable economic growth and facilitate the attainment of middle-income status.

Date: 2026
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