ROLE OF FISCAL POLICY IN THE NIGERIA ECONOMIC GROWTH
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ROLE OF FISCAL POLICY IN THE NIGERIA ECONOMIC GROWTH
Chapter one
1. 0 introduction
The Nigerian economy’s growth and development have been volatile over the years, resulting in numerous shocks and disturbances both inside and abroad. Internally, some of the variables responsible for it include volatile investment and consumption habits, poor execution of public programmes, shifts in future expectations, and the accelerator.
Similarly, external factors such as wars, revolutions, population growth rates and migration, technical transfer and changes, and the openness of the Nigerian economy have been highlighted as contributing.
The cyclical changes in the country’s economic activities have resulted in recurrent increases in unemployment and inflation rates, as well as external sector imbalances (Gbosi 2001).
In other words, fiscal policy is a major economic stabilisation tool that involves taking measures to regulate and control the volume, cost, availability, and direction of money in an economy in order to achieve a specific macroeconomic policy goal and counteract undesirable trends in the Nigerian economy (Gbosi, 1998).
As a result, they cannot be left to market forces of demand and supply, and other instruments of stabilisation, such as monetary and exchange rate policies, are utilised to address the highlighted difficulties (Ndiyo and Udah 2003).
This may include an increase or decrease in taxes as well as government expenditures, which are the foundation of fiscal policy; however, in reality, government policy requires a combination of fiscal and monetary policy instruments to stabilise an economy because neither of these single instruments can solve all of an economy’s problems (Ndiyo and Udah, 2003).
The Nigerian economy entered a recession in the early 1980s, which culminated in a depression in the mid-1980s. This depression lasted into the early 1990s, with little signs of improvement.
The government constantly implemented policy steps to address and overcome the deteriorating economy. Drawing on the Great Depression, government policy initiatives attempted to alleviate the depression included increased government spending (Nagayasu, 2003).
According to Okunroumu (1993), the management of the Nigerian economy to attain macroeconomic stability has been unproductive and harmful, as seen by the bad inflationary tendency, government budgetary policies, and undulating foreign exchange rates.
The fall and increase of GDP, an unfavourable balance of payments, and rising unemployment rates are all signs of developing macroeconomic instability.
As a result, the Nicrian economy is unable to function effectively in an environment characterised by poor capacity utilisation due to a lack of foreign cash and Nigeria’s turbulent and unpredictable government policies (Isaksson, 2001).
The purpose of this study is to evaluate the impact of fiscal policy on the macroeconomic stabilisation of the Nigerian economy. To avoid overload, we divided this tutorial into four portions.
The next chapter reflects the conceptual framework, whereas Chapter 3 is the methodology, Chapter 4 is data analysis, and Chapter 5 finishes the study with appropriate suggestions.
1.2 Statement of the Problem
This study examines the effect of policies on the level of economic activity in Nigeria. This theme was chosen due to the country’s poverty predicament. The country has enormous economic potential due to its immense material and people resources, which are now underutilised.
As a result, the country is trapped in the poverty trap of low savings, which are produced by low income, and low productivity, which is caused by a lack of capital. The lack of capital is caused by poor income, which leads to low savings.
How can the chronic poverty cycle be stopped so that the country does not continue in a low-equilibrium growth trap? This is the study’s central issue.
This study extends the idea that poverty traps can be broken by government fiscal policy. Government policies will be improved in order to encourage economic growth. All of these will assist the country overcome its chronic poverty.
1.3 Aims and Objectives of the Study
This study aims to achieve the following objectives:
a. The role of fiscal policy in the development of Nigeria’s economy
b. Assess the impact of government recurring expenditure on economic activity.
b. Determine the influence of capital expenditure on the level of economic activity.
d. to measure how taxes affect the level of economic activity.
e. To evaluate the impact of regulation in controlling economic development.
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