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The Cyclical Pattern Of Fiscal Policy In Nigeria

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Abstract

This study examined the cyclical pattern of fiscal policy in Nigeria, focusing on fiscal variables from both expenditure and taxation sides. On the expenditure side, the cyclical patterns of both recurrent and total expenditures were analyzed while personal income tax, company income tax, and value-added tax were examined on the taxation side. The study used the ex-post facto research design, employing both correlation and ordinary least square regression approaches to analyze annual time series data spanning through 1981 to 2020. The results from the two approaches showed that all the fiscal variables follow a procyclical pattern, except the valueadded tax which follows an acyclical pattern. This implies that during economic booms, government spends more and lessens taxes, while during economic busts, government spends less and raises taxes. The study, therefore, concludes that fiscal policy in Nigeria is procyclical. Owing to the unsustainability and growth-receding characteristics of procyclical fiscal policy, it is therefore important that the Nigerian government formulate and implement policy changes aimed at enhancing the nation's capacity to save in prosperous times in order to create fiscal reserves that could be utilized in difficult times.

Suggested Citation

  • S., Segun, AWODE, & A., Sheriffdeen, TELLA, & T., Abayomi, ONANUGA,, 2023. "The Cyclical Pattern Of Fiscal Policy In Nigeria," Journal of Taxation and Economic Development, Chartered Institute of Taxation of Nigeria, vol. 22(1), pages 1-18, March.
    • Handle: RePEc:ris:jotaed:0070
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    Cited by:

    1. Caterina Seghini & Stéphane Dees, 2024. "The Green Transition and Public Finances," Working papers 949, Banque de France.
    2. Ackermann, Klaus & Awaworyi Churchill, Sefa & Smyth, Russell, 2024. "Estimating the relationship between ethnic inequality, conflict and voter turnout in Africa using geocoded data," World Development, Elsevier, vol. 180(C).

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