Fiscal Policy: Implication for the Sustainability of the Nigerian Economy

Abstract

This paper examines the effect of both productive and non-productive government expenditure, finance by distortionary and non-distortionary taxation on economic growth in Nigeria using annual data from 1985 to 2023. We employ the Johansen cointegration and error correction technique for analyzes and the findings are consistent with empirical findings  in other countries where an increase non-productive government expenditure using non-distortionary taxes has neutral effect, while the productive government expenditure has positive effect on economic growth as predicted by economic theory. By implication, the composition of government expenditure and tax revenue is vital in determining economic growth in Nigeria.