The Effect of Fiscal Policy Shocks on Nigeria Economic Output: 1981 – 2015

Mary Bosede Olufayo

Abstract


The study investigates the effect of fiscal policy shocks on economic output in Nigeria using ex-post facto research design.  The study was piloted via co-integration and vector Autoregressive (VAR) modeling spanned from 1981 -2015 indicates co-integrating relationship among the variable.  Thus, a further test to report the variable shocks response and their innovation adopts vector Autoregressive technique. The estimated result of the impulse response revealed that a shock to economic growth produce a negative effect on itself while variance decomposition revealed that GDP grow faster with robust tax system and sound infrastructural framework, However it recommends that the government through the central bank of Nigeria should apply appropriate fiscal measure to stabilize the economic output



Keywords


Fiscal Policy, Economic Output, Co-integration and Vector Autoregressive.

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