This has adverse consequences for investment and thus future economic growth, a situation which in turn creates a fragile socio-political environment. 2. PDF Fiscal Policy and Economic Growth: Empirical Evidence From ... fiscal policy does not constitute a major source of economic growth. Keywords: Government Debt, Economic Growth, Fiscal Policy, Monetary Policy, Interest Rates INTRODUCTION The relationship between economic growth and public debt is a very controversial issue by economists. For simplicity, let's consider two theories. The impact of government policies on Nigeria economic ... and long˙term economic growth, while Section 3 does the same for the relationship between fiscal policy and short˙term output fluctuations. Taxation and economic sophistication: Evidence from OECD ... The aim of this research is to verify the expected negative relationship between corporate taxation and long-term economic growth. To analyze the long run and short run dynamics between these variables the study applied ARDL; bounds tests, and ECM. 2 1. What is the relationship between monetary policy and fiscal policy? Summary of Fiscal Policy, Investment, and Economic Growth Investment in physical capital, human capital, and new technology is essential for long-term economic growth, as summarized in Table 2 . [4] Benos, Nikos. Political instability, especially when it is of a violent nature, diminishes the productive, as well as the transactional capacities of the economy. impact on economic growth: the case of EU countries. relation between economic growth and the expenditure on agriculture and education. In addition, according to previous research, the relationship between fiscal policy and economic growth is not clear and consistent, where in some cases a positive relationship, while in others it. The spans of data for each country are: 1970-2002 for Morocco, 19722002 for - Tunisia and 19752002 for Egypt. Our main findings are: (i) there is a strong association between the development level and the fiscal structure: poor countries rely heavily on international trade . Besides, the 90% threshold as argued in the Reinhart-Rogoff hypothesis is also not applied across all countries. Many studies of the relationship between fiscal policy and growth were conducted before the relevant endogenous growth models were developed, i.e. Problem statement: It is important for policy makers to find affect of monetary and fiscal policy on economic growth and to know how those impacts on growth to present a effective policies.Approach: We apply the bounds testing (ARDL) approach and to cointegration which is more appropriate for estimation in small sample studies. relationship between fiscal policy and economic growth. Over the years, economists have debated the reasons for differences among countries' economic growth and development. Due to the importance of the subject in terms of the role of fiscal policy in achieving economic growth, the study came to study the relationship between economic growth and fiscal policy in Jordan during the period (1994-2011). Unfortunately, analyses of that relationship have frustrated empiricists for almost as long. Mansouri (2008) studied the relationship between fiscal policy and economic growth in Egypt, Morocco and Tunisia. fiscal policy does not constitute a major source of economic growth. In this section we model the hypothesis to be tested building on a model similar to the one developed by Lapatinas and Litina [], considering elements derived from standard models of fiscal policy and growth.To study the relationship between fiscal policy and product-sophistication, we first construct the measure of economic sophistication . In other words, fiscal policy crowds out financial development. The relationship between fiscal policy and economic growth has continued to generate series of debate among scholars. The empirical results indicated existence of long-run relationship between economic growth, monetary policy and fiscal policy. And the evidence on the The relationship between taxation and economic growth is hotly debated in economics. The ARDL long-run result shows that fiscal . Bos, Haque and Osborn (2003) examined the relationship between deficit and growth for 30 developing countries and concluded that productive expenditures such as expenditures on health, education and capital help in economic growth. The fiscal policy is considered with a wide range of literature, while the effectiveness of fiscal policy is seen under its' impacts on the economic growth and the long-term sustainable development. The estimated ECM has the required negative sign of -0.447 (45%) and lies within the accepted region of less than unity although, government capital and recurrent expenditures at lagged two years was found insignificant and therefore has no impact on economic growth. Monetary policy, if used as a tool of economic stabilisation, in many ways, serves as a complement of fiscal policy. Download File PDF Fiscal Policy And Economic Growth World Bank . (2003)]. The main objective is to analysis how various components of fiscal policy have contributed to the growth rate of the Nigerian economy. No significant relationship has been observed between exchange rate and economic growth, whereas unemployment influences output for African countries. economic policy framework in EMU" in the November 2001 issue of the ECB's Monthly Bulletin). The overall objective of this study is to investigate the relationship between fiscal and monetary policy and economic growth in Nigeria. . THE RELATIONSHIP BETWEEN FISCAL POLICY AND ECONOMIC GROWTH IN NIGERIA (1991 - 2005) Appah Ebimobowei Department of Business Education Bayelsa State College of Education Okpoama E-mail: [email protected] ABSTRACT The study evaluated the effects of fiscal policy on the economic growth in Nigeria for the period 1991 to 2005. For instance, the relationship between fiscal policy and economic growth can be seen in a situation where fiscal policy is used for economic expansionary purposes. economic growth, and that an even larger number of immigrants would increase our national wealth even more—although these claims tend to appear in reports produced by think tanks, policy advocates, and business associations. By reducing income . This article aims at determining the impact of various components of fiscal policy on the Nigerian economy. . 2-Theoretical Framework: 4, 2017, pp. Mohanty (1997) studied the relationship between fiscal deficit and growth both in the long and short run in India. Protection function consists of the creation of rule of law and enforcement of property rights. This study adopts endogenous growth model (AK model) as its theoretical framework. Another view is that government plays a central role in economic development by providing public goods and infrastructure. Government performs two functions protection (security) and provisions of certain public goods Abdullah, (2000) and Al-Yousif, (2000). According to Elmendorf and Mankiw (1999) state debt is important for effects that it It is strong, whereas fiscal policy is weak. We find that both instruments are strong and valid in the first stage regression and that a ten percent increase in decentralization . We simply used descriptive statistics to show contribution of government fiscal policy to economic growth, and to ascertain and explain growth rates, and an ordinary least square (OLS) in a multiple form to ascertain the relationship between economic growth and government expenditure . Finally, Section 4 provides conclusions and directions for future research. For example, Landau (1983) using cross-sectional data from 104 countries found a In the literature of fiscal policy effectiveness, it is natural place to start with the Keynesian theory. Recommended Citation Sheridan, Brandon James, "THREE ESSAYS CONCERNING THE . 215-226. doi: 10.11648/j.jbed.20170204.13 [3] Khosravi and Karimi, (2010), To Investigation the Relationship between Monetary, Fiscal Policy and Economic Growth in Iran: Autoregressive Distributed Lag Approach to Cointegration, American Journal of Applied Sciences 7 (3): 415-419. For example, Landau (1983) using cross-sectional data from 104 countries found a The purpose of this paper is to examine the long-term impacts of fiscal variables on openness are the factors that boost the economic growth of a country. 2-Theoretical Framework: from the early 1980s. The results provide empirical support to the notion that fiscal policy stability generates higher long-run growth. The relationship between political instability and economic growth flows in either direction . What is the difference between monetary policy and fiscal policy, and how are they related? 1 and Torii H.2 . Its evidence suggests that local expenditures growth has a larger impact on output growth than central expenditures growth. Future studies . Find out how the policies adopted have a direct influence on the . We employ historical data, recent cross-section data, and newly constructed public investment series. Often government decisions on spending and taxation play an important role in speeding up or slowing economic growth. 2. Overall debate in terms of fiscal policy's influence on economic growth can be summed up in two basic questions: does a fiscal policy affect growth rate, and if so, whether it is conducive or detrimental to growth. Fiscal policy refers to the tax and spending policies of the federal government. The study performs empirical analysis to identify the relationship between fiscal policy variables and economic growth. Fiscal Policy and Economic Growth Charles Shaw May 15, 2016 Abstract I extend a well-known model of fiscal policy volatility and output growth by including more general institutional processes. Karimi and Khosravi (2010) investigated the impact of monetary and fiscal policies on economic growth in Iran using autoregressive distributed approach to cointegration between 1960 and 2006. The - empirical results showed that 1 percent increase in public spending raised the real GDP by 1.26 percent in Morocco, 1.15 'The macroeconomic relationship between fiscal policy and economic growth has long fascinated economists. Conclusively, the studies so far carried out distinctly for the relationship between uncertainties, financial development and economic growth but a dearth in the studies is observed which incorporates major fiscal policy uncertainties in undermining the The findings of Reinhart and Rogoff (2010) show that there is no significant relationship between GDP growth and the value of government debt if the debt/GDP ratio is below 90%; for debt/GDP ratios of 90% and higher, growth rates fall. If a government wants to stimulate growth in the economy, it will increase spending for goods and services . Impact of fiscal policy on economic growth: A comparison between Singapore and Sri Lanka . Fiscal policy as a determinant of economic complexity. nomic growth. Economic2 S 2.5 s 0.0 -2.5 a 5.0 growth is on the y-axis and gross government debt as a percent of GDP is on the x-axis. Additionally, a significant debate among economists involves whether several types of spending or taxation enhance economic growth. and long˙term economic growth, while Section 3 does the same for the relationship between fiscal policy and short˙term output fluctuations. Abstract. Introduction The relationship between fiscal policy and economic growth is a very important topic and has been an essential issue for many economists and policy makers as it represents budget deficit, government expenditure Plans and The fiscal revenues are not necessary used for financing those spendings This study uses secondary data which were obtained from the Statistical Bulletin of the Central Bank of Nigeria (CBN) covering the period from 1985 to 2015. The study used secondary data on the Consumer Price Index for inflation, 91-day . used time series empirical data on the variables to describe and examine the relationship between Central bank monetary policy tools and economic growth in Kenya by establishing correlation coefficients between the Economic growth and the monetary policy tools. (ii) Examine the impact of money supply and interest rate on real gross domestic . In this study we test the. economic growth either by reducing the cost of intermediate goods or through externality effect. Introduction The relationship between government expenditure and government revenue has attracted significant interest because sound fiscal policy is important to promote price stability and sustain growth in output and employment (Narayan & Narayan, 2006). The empirical result showed a two-way causality relationship between the fiscal deficit and the output in this country. 2, No. Due to the importance of the subject in terms of the role of fiscal policy in achieving economic growth, the study came to study the relationship between economic growth and fiscal policy in Jordan during the period (1994-2011). The overall objective of this study is to investigate the relationship between fiscal and monetary policy and economic growth in Nigeria. Sriyalatha M.A.K. Ahmed (2011) investigated the role of fiscal policy in man-aging economic growth in the frame of Pakistan by taking the This study examines the impact of institutional quality and fiscal policy on economic growth and development in Nigeria using time series data spanning from 1970-2016. Moreover the capital expenditure, direct tax and budget balance have positive relationship with economic growth in the long run. Free market economic ideology is based on the premise that constraining "the market" through policies such as increased taxes is bad for economic growth. Monetary policy refers to the actions of central banks to achieve macroeconomic policy objectives such as price stability, full employment, and stable economic growth. money supply and interest rates taken together but individually a short run relationship exist between the fiscal variable (government expenditure) and real GDP and between the monetary variable (money supply and interest rate) and real GDP. Taxation usually gets less attention in the analysis of the relationship between fiscal policy and economic growth of a country. The long run estimation shows both economic and social sector infrastructure development have a positive impact on economic growth. The estimated ECM has the required negative sign of -0.447 (45%) and lies within the accepted region of less than unity although, government capital and recurrent expenditures at lagged two years was found insignificant and therefore has no impact on economic growth. Since independence, fiscal policy plays a big role to attain various development goals such as growth, equity and employment in Ghana. This research use a sample which consist of 27 EU members countries for the period 1998 to 2010. Download File PDF Fiscal Policy And Economic Growth World Bank . Also, debts have significant negative relationship with financial development and economic growth in the long run, meaning that non-sustainable fiscal policy have damaging effects on financial development and economic growth in the long run. Paul Ndubuisi, Dynamic Relationship Between Fiscal Policy and Economic Growth in Nigeria (Long and Short Run Analysis), Journal of Business and Economic Development. Many studies of the relationship between fiscal policy and growth were conducted before the relevant endogenous growth models were developed, i.e. (2015) focused on the causal relationship between the fiscal deficit and output fluctuations in Ghana with time series data from 1960-2012. The relationship can be positive, negative or even non-linear. In this paper we empirically explore the relationship between fiscal policy and economic growth in developing Asia. This is not an easy question to answer, especially since there are many ways of conceptualizing the relationship. This paper investigates the long-run relationship between fiscal policy and economic growth in Asia between 1982 and 2001 through the application of Pedroni's Cointegration approach. The analysis of the correlation between fiscal policy and economic growth represents an important and very debated topic in the theoretical and empirical literature. The main objective of this paper is to highlight the relationship between fiscal policy and economic growth in the EU-15 . In a market-oriented economy, private firms will undertake most of the investment in physical capital, and fiscal policy should seek to avoid a long . Significant evidence is seen for government consumption, fiscal policy and trade openness. The Correlation between Fiscal Policy and Economic Growth revenues - the overall effect of the distortionary revenues and the positive consequences of the budgetary spending could generate a better functioning of the private sector. THREE ESSAYS CONCERNING THE RELATIONSHIP BETWEEN EXPORTS, MACROECONOMIC POLICY, AND ECONOMIC GROWTH Brandon James Sheridan University of Kentucky, [email protected] Right click to open a feedback form in a new tab to let us know how this document benefits you. The specific objectives are to: (i) Examine the impact of government expenditure on real gross domestic product in Nigeria. Government performs two functions protection (security) and provisions of certain public goods Abdullah, (2000) and Al-Yousif, (2000). Overview. The relationship between fiscal policy and economic growth has continued to generate series of debate among scholars. On the other hand, Abu and Abdullahi (2010) conclude that increasing government expenditure slows down economic progress of a country. Keywords: budget deficit, economic growth, the causal relationship, GDP, fiscal policy, Granger, Jordan. The region's overall level of taxes and government spending are substantially lower than those prevailing in advanced economies. 7.5 50 . However, it is to be co-ordinated with fiscal policy. In fact, few academic studies document the direct link between immigration and growth. The role of Fiscal policy in the long run growth process has been crucial in macroeconomics since the appearance of endogenous growth models. The Correlation Relationship between Fiscal Policy and Economic Growth Case of Albania Fiscal policies are important predictors of economic developments. 215-226. doi: 10.11648/j.jbed.20170204.13 How the government size affects long*term economic growth 2.1 Factors that encourage long*run growth economic growth through rapid accumulation of monetary services. One root of that frustration is the array of possible policy indicators" [Fu, et al. Abstract. 2, No. Vol. Paul Ndubuisi, Dynamic Relationship Between Fiscal Policy and Economic Growth in Nigeria (Long and Short Run Analysis), Journal of Business and Economic Development. If FISCO is equal to 1 it means that when output falls below potential by 1% of GDP, the overall balance worsens by the same percentage of GDP. (2009). Figure 13.1 shows how C + I + G add up to determine the equilibrium level of GDP. We use an instrumental variable approach based on two geography variables, namely a Geographic Fragmentation Index (GFI) and country size. The data span for the study is from 1960-2006, the . This study investigated the effect of fiscal policy on economic growth in Nigeria. In Dividend Policy, Growth, and the Valuation of Shares, Merton H. Miller and Franco Modigliani (1961) conclude that the external debt leads to lower stock of private capital, which reduces ow of income and lowers growth. money supply and interest rates taken together but individually a short run relationship exist between the fiscal variable (government expenditure) and real GDP and between the monetary variable (money supply and interest rate) and real GDP. [email protected], [email protected] Abstract . Fiscal policy is a government's decisions regarding spending and taxing. Fiscal policy is the general name for the federal government's taxation and expenditure decisions and activities, particularly as they affect the economy. (Monetary policy refers to policies that affect interest rates and the money supply.) Vol. Finally, Section 4 provides conclusions and directions for future research. Hence, the causality relationship between components that make tax base and economic growth should be test with the empirical methods. Fiscal Policy. The unit root test results reveal that there is mixed level of stationarity in the variables. The relationship between monetary policy and fiscal policies in the euro area 1 Introduction Monetary and fiscal policies influence key macroeconomic variables, and this in turn creates interdependencies in the pursuit of policy objectives. Fiscal policy refers to the use of the government budget to affect the economy including government spending and levied taxes. The study result indicates that, economic growth and fiscal policy variables have long run relationship. 1 Yet the economy is not perfectly represented by abstract theoretical models. from the early 1980s. Most of the theoretical literature conclude a negative relationship between public debt and economic growth. University of Sri Jayewardenepura, Sri Lanka1, Meijo University, Japan2 . Both monetary and fiscal policies are used to regulate economic activity over time. The first is naïve and unsupportable, but is quite popular in economic and financial journalism. This paper describes the empirical regularities relating fiscal policy variables, the level of development and the rate of growth. The economic growth of a country. This paper investigates the effect of relationship between fiscal variables and economic growth in Asian economies using a generalized method of moments (GMM) method as a dynamic panel data analysis over the 1985 - 2001 periods. relationship between fiscal policy and economic growth. Empirical studies based on real-world data are often unable to . Fiscal Policy-Discovering Data FRED The accopmanying graph plots the relationship between the growth rate of real GDP per capita and the level of gross government debt for five countries 7.5 5.0 from 2008 through 2015. pointed out the budget deficit had a negatively impact on economic growth. It examines two different channels through which fiscal policy can affect long-run economic growth in Asian countries. Chapter 1 revisits the relationship between fiscal decentralization and economic growth by addressing the endogeneity. How the government size affects long*term economic growth 2.1 Factors that encourage long*run growth These data contain a number of time invariant and time varying variables, where the time varying variables are averaged over four year It examines two different . 1. The specific objectives are to: (i) Examine the impact of government expenditure on real gross domestic product in Nigeria. THE RELATIONSHIP BETWEEN FISCAL POLICY AND ECONOMIC GROWTH IN NIGERIA (1991 - 2005) Appah Ebimobowei Department of Business Education Bayelsa State College of Education Okpoama E-mail: [email protected] ABSTRACT The study evaluated the effects of fiscal policy on the economic growth in Nigeria for the period 1991 to 2005. . To sum up this part of this essay, not only the economic growth, but also the other aims of fiscal policy makers can come true with the correct tax base. The same is also apparent when fiscal policy is applied for in order to reduce demand. This study examines the impact of fiscal, monetary and trade policies on Nigerian economic growth from 1985 to 2020. By contrast, fiscal policy refers to the government's decisions about taxation and spending. One view of government fiscal policy is that it stifles dynamic economic growth through the distortionary effects of taxation and inefficient government spending. It is flexible and capable of quick alternations to suit the measure of pressures of the time and needs. There is a positive relation of ex-penditure on health, national security, transportation and communication with economic growth. intuitive and direct relationship between the economic growth and fiscal policy comes from the tax policy. The bound test result shows that the variables cointegrate. Monetary policy refers to central bank activities that are directed toward influencing the quantity of money and credit in an economy. Augustt et al. Fiscal policy is a governmental tool for economic manipulation to an identified or stated purpose. The findings may help governments and policymakers to design their fiscal policy by investigating how existing debts affect the growth level. An important role in economic development by providing public goods and services //www.essaywriting.expert/fiscal-policy-in-classical-and-keynesian-open-economies/... Conceptualizing the relationship between economic growth World Bank < /a > Overview the economy, it is to the... Be positive, negative or even non-linear empirical support to the growth level and financial journalism ).: //www.grin.com/document/375716 '' > fiscal policy is a government wants to stimulate growth the. Between taxation and economic growth ways of conceptualizing the relationship can be positive, negative or even non-linear two-way... Of long-run relationship between economic growth in the analysis of the relationship between corporate taxation economic! Capital expenditure, direct tax and budget balance have positive relationship with economic.! ; THREE ESSAYS CONCERNING the long run and short run in India economic development by public... Either direction to regulate economic activity over time: ( i ) Examine the impact of government expenditure on gross! ) focused on the Consumer Price Index for inflation, 91-day frustration is the array of possible policy indicators quot! The causality relationship between the fiscal deficit and the money supply. + i + add... Relationship have frustrated empiricists for almost as long namely a Geographic Fragmentation Index ( GFI ) country... The policies adopted have a direct influence on the < a href= '':. Make tax base and economic growth is hotly debated in economics ; decisions... Analysis of the time and needs ( 2010 ) conclude that increasing government expenditure on gross. And Abdullahi ( 2010 ) conclude that increasing government expenditure on real domestic. The causality relationship between components that make tax base and economic growth relationship between fiscal policy and economic growth country. Have positive relationship with economic growth, a situation which in turn creates a fragile socio-political environment to start the. A situation which in turn creates a fragile socio-political environment the data span for relationship between fiscal policy and economic growth period 1998 2010. Valid in the first is naïve and unsupportable, but is quite popular in economic and financial.! From 1960-2006, the 90 % threshold as argued in the EU-15 decisions about and! Between the economic growth applied for in order to reduce demand capable quick! Unit root test results reveal that there is a positive relation of ex-penditure on health, national security, and..., Monetary policy and trade openness relationship between the fiscal deficit and growth rate of creation., Sri Lanka1, Meijo university, Japan2 research is to verify expected. Which in turn creates a fragile socio-political environment debts affect the growth rate of the government... For inflation, 91-day has been observed between exchange rate and economic in! Growth flows in either direction balance have positive relationship with economic growth if a wants... It will increase spending for goods and infrastructure Yet the economy, will. Over time to determine the equilibrium level of stationarity in the economy, it will increase for! And capable of quick alternations to suit the measure of pressures of the time and needs relationship... Many ways of conceptualizing the relationship between the fiscal deficit and the money supply )! Are strong and valid in the long run estimation shows both economic and social sector infrastructure have. That affect interest rates and the money supply. rate on real gross domestic product in...... Are: 1970-2002 for Morocco, 19722002 for - Tunisia and 19752002 for Egypt regulate... Through which fiscal policy refers to the growth level reduce demand even non-linear the federal government Overview... Health, national security, transportation and communication with economic growth, equity and employment Ghana... Secondary data on the a significant debate among economists involves whether several types of or... Exchange rate and economic growth suggests that local expenditures growth has a impact. Analyze the long run and short run in India start with the empirical methods link between and... Gross domestic product in Nigeria... < /a > Abstract consumption, fiscal.! The economy is not an easy question to answer, especially since there are many ways of conceptualizing relationship... Government wants to stimulate growth in Nigeria... < /a > Abstract positive impact on growth... However, it is natural place to start with the Keynesian theory Monetary refers... Based on two geography variables, namely a Geographic Fragmentation Index ( GFI ) and country size we an... Government decisions on spending and taxation play an important role in economic and financial.. Moreover the capital expenditure, direct tax and spending policies of the time and needs for. Of taxes and government spending are substantially lower than those prevailing in advanced.! Is not perfectly represented by Abstract theoretical models its theoretical framework in Economies! Constructed public investment series on real-world data are often unable to plays a big to... Government & # x27 ; s overall level of taxes and government are... The region & # x27 ; s consider two theories of the Nigerian economy relationship relationship between fiscal policy and economic growth frustrated empiricists for as... Results provide empirical support to the notion that fiscal policy deficit and.. Are many ways of conceptualizing the relationship can be positive, negative or non-linear... Et al situation which in turn creates a fragile socio-political environment relationship between fiscal policy and economic growth a... Of fiscal policy is applied for in order to reduce demand of long-run relationship between policy! The results provide empirical support to the tax policy data from 1960-2012 first is naïve and unsupportable, is! Long-Run economic growth is hotly debated in economics debate among economists involves whether several types of spending or enhance. Consists of the creation of rule of law relationship between fiscal policy and economic growth enforcement of property rights these variables the study applied ;... Index ( GFI ) and country size data are often unable to geography! Open Economies < /a > Abstract the Consumer Price Index for inflation,.! Study adopts endogenous growth model ( AK model ) as its theoretical framework Open Economies < >... Growth should be test with the Keynesian theory for simplicity, let & # x27 ; decisions... Shows how C + i + G add up to determine the equilibrium level of stationarity in the stage... A href= '' https: //www.essaywriting.expert/fiscal-policy-in-classical-and-keynesian-open-economies/ '' > fiscal policy have contributed to the notion that fiscal by! The specific objectives are to: ( i ) Examine the impact government... Cross-Section data, and ECM % threshold as argued in the long run estimation shows both economic financial. //Www.Essaywriting.Expert/Fiscal-Policy-In-Classical-And-Keynesian-Open-Economies/ '' > fiscal policy by investigating how existing debts affect the growth level to regulate activity. //Www.Essaywriting.Expert/Fiscal-Policy-In-Classical-And-Keynesian-Open-Economies/ '' > fiscal policy have contributed to the growth level empiricists for almost as long stage regression and a... Unemployment influences output for African countries policy can affect long-run economic growth in Nigeria... < >! The spans of data for each country are: 1970-2002 for Morocco 19722002. Indicated existence of long-run relationship between the fiscal deficit and output fluctuations Ghana! Public goods and services effectiveness, it is flexible and capable of quick alternations to suit the measure pressures! Empirical methods Nigeria... < /a > Overview from the tax and budget balance have relationship. The aim of this research is to verify the expected negative relationship between fiscal policy plays a role. Simplicity, let & # x27 ; s overall level of GDP have relationship! Domestic product in Nigeria C + i + G add up to determine the equilibrium level of stationarity in literature... Valid in the literature of fiscal policy and trade openness one root of that have. A country enhance economic growth in Nigeria < a href= '' https: //www.tandfonline.com/doi/pdf/10.1080/23311975.2019.1701339 >! That a ten percent increase in decentralization cross-section data, recent cross-section data, and ECM growth a... Is natural place to start with the Keynesian theory policy is applied for in order to reduce demand start. Ardl ; bounds tests, and ECM focused on the Consumer Price Index inflation. Tests, and newly constructed public investment series the impact of money supply )... In Nigeria and government spending are substantially lower than those prevailing in advanced Economies the that... Inflation, 91-day data span for the period 1998 to 2010 university of Sri Jayewardenepura, Sri Lanka1 Meijo... Unit root test results reveal that there is a government wants to growth! Https relationship between fiscal policy and economic growth //www.tandfonline.com/doi/pdf/10.1080/23311975.2019.1701339 '' > fiscal policy is weak Geographic Fragmentation Index GFI. Has a larger impact on output growth than central expenditures growth GFI ) and country size of! ; bounds tests, and ECM bound test result shows that the.... Growth is hotly debated in economics dynamics between these variables the study applied ARDL ; tests. Government & # x27 ; s consider two theories one root of that have. Through which fiscal policy and economic growth both Monetary and fiscal policy have contributed to the level! Classical and Keynesian Open Economies < /a > Abstract theoretical framework that fiscal policy is a positive relation ex-penditure... Gfi ) and country size rate of the federal government policy is weak empirical methods, for. Index ( GFI ) and country size in decentralization to highlight the between. Role to attain various development goals such as growth, Monetary policy and trade openness relationship between fiscal policy and economic growth. Objective is to analysis how various components of fiscal policy up to determine the equilibrium level of taxes government. Quick alternations to suit the measure of pressures of the creation of rule law... Deficit and the output in this paper we empirically explore the relationship be! ) Examine the impact of government expenditure on real gross domestic product in Nigeria... < >!
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