ARCHIVES
VOL. 5, ISSUE 3 (2023)
Impact of fiscal policy measures on inflation and unemployment in Nigeria
Authors
Thankgod Tonye, Nwikina Christain Gbawae
Abstract
This study investigated
the relative impact of fiscal policy measures on inflation and unemployment in
Nigeria. Data for the study were obtained from Central Bank of Nigeria (CBN)
statistical Bulletin and World Banks World Development indicators spanning from
1981 to 2021. The formulated model were subjected to unit root test using both
Augmented Dickey Fuller (ADF) and Philip-perron (PP) approach. The outcome of
the unit root shows that, model one have mixed order of integration I(1) &
I(0) while model two showed that the variables were not stationary at level but
became stationary after first difference. Both the Auto-regressive Distributive
Lag (ARDL) bound test and Johansen approach to co-integration indicates that
there is a long-run relationship between fiscal policy measures and inflation
and unemployment. Further findings on the relationship between fiscal policy
measure and inflation showed that public expenditure is significant and slow
down inflation rate in the long-run and the most current period of the
short-run while debt service ratio to export had a negative and significant
relationship with inflation in the previous and second year period. Public
revenue reported a positive and significant relationship with inflation in the
long-run while public debt revealed a positive but insignificant relationship
with inflation both in the short-run and long-run. Equally, the relationship
between fiscal policy measures and unemployment indicated that public revenue
and debt service ratio is statistically significant and reduce unemployment in
the long-run and short-run. Public debt is significant and positively related
with unemployment in the long and short-run while public expenditure reported
negative and insignificant relationship with unemployment in the short-run. It
was recommended amongst others that the federal government should increase
their revenue base, lock-up leakages to enable them match the projected expenditure.
This will reduce public borrowing and debt servicing.
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Pages:21-29
How to cite this article:
Thankgod Tonye, Nwikina Christain Gbawae "Impact of fiscal policy measures on inflation and unemployment in Nigeria". International Journal of Social Science and Humanities, Vol 5, Issue 3, 2023, Pages 21-29
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