Publication Date: 2022/12/24
Abstract: The goal of national budget to impact on the economy, create conducive business climate and to achieve various types of economic, social and regulatory objectives remains an illusion in the light of rising general price level and unemployment rate. This study investigated the nexus between fiscal policy and productivity of firms in Nigeria. Time series data covering a period 1981-2019 were sourced from the CBN Statistical Bulletin on relevant variables. Pre-analysis tests of unit roots and co-integration were conducted. Post estimation test (CUSUM) indicated that the model does not suffer from serial correlation or heteroscedasticity; the residuals are normally distributed and the model is structurally stable. All the post estimation tests’ results suggest that the short-run and long-run estimates from the estimated Autoregressive Distributed Lag useful for forecasting and disentangle long-run relationship from short-run dynamics model are valid and reliable. The estimated long-run equation shows that Government Capital Expenditure (GCE) and Government Recurrent Expenditure (GRE) have positive significant impacts on firms’ productivity (FTO) in Nigeria while Non-oil Revenue (NOR) exerts negative significant impact on FTO. However, Public Debt (PD) was found to have positive but insignificant impact on FTO. Hence, the study recommended that government should focus on investing on infrastructures and consider a friendly tax regimes with a view to enhancing firms’ productivity and employments.
Keywords: Fiscal Policy; Government Expenditure; Autoregressive Distributed Lag (ARDL); Firms’ productivity JEL Classification: C22; EC62; H50, H60; O11.
DOI: https://doi.org/10.5281/zenodo.7478824
PDF: https://ijirst.demo4.arinfotech.co/assets/upload/files/IJISRT22NOV964.pdf
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