Impact of Fiscal Policy on Balance of Payments in Nigeria

Authors

  • Bukonla G Osisanwo Olabisi Onabanjo University

Abstract

This study investigates the impact of fiscal policy on balance of payments adjustment
in Nigeria within the periods, 1981-2015. Using the bound testing approach, the study
established the relationship that exists among fiscal policy instruments (tax and
government expenditure), investment, output and balance of payments adjustment in
Nigeria. The result revealed that in the long-run, government spending, investment and
outputs have positive impact on balance of payments adjustment in Nigeria. However,
tax revenue had negative impact on balance of payments in Nigeria. The high deficit
finance by the Nigerian government where government spending is greater than tax
revenue in most of the years considered had sustained the current account surplus in
the country. Therefore, expansionary policies on fiscal policy measures should be
encouraged as they play vital role for the enhancement of balance of payments in
Nigeria.


Keywords
Tax, government spending, investment, income, current account balance

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Published

2018-06-14