EFFECT OF FISCAL POLICY VARIABLES ON NON-OIL INDUSTRIAL SECTOR OUTPUT IN NIGERIA
Keywords:
Government expenditure, Government Revenue, Non-oil output, Public debtAbstract
This study examined the effect of fiscal policy variables on Nigeria's non-oil industrial sector output from 1990 to 2024 using the Vector Error Correction Model (VECM). The research analyzed the impact of government capital expenditure, government revenue, domestic debt, and external debt on non-oil industrial output. Long-run VECM estimates reveal that government capital expenditure (-0.4115) and domestic debt (-0.8678) exhibit statistically significant negative coefficients, while external debt (0.1227) shows a statistically significant positive coefficient. Government revenue (0.0825) demonstrates a weakly significant positive relationship. The study concludes based on these estimated relationships that current patterns of capital expenditure and domestic borrowing are associated with lower non-oil industrial output, while external debt is associated with higher output. Recommendations include reforming capital expenditure implementation to address its negative association, reducing domestic borrowing levels, maintaining external borrowing with strengthened utilization frameworks, and addressing revenue mobilization weaknesses to potentially enhance its modest positive effect.
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