International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Fiscal Policy and Poverty Reduction: the Nigeria Perspective
Elisa Ehinmilorin, Mojibola Bamidele-Sadiq, Ubong Ekerette Udonwa, PhD, Dominic Richard Ekpeno

Fiscal policy is a financial means used by government to correct familiar economic disturbances and reset the economic to an equilibrium state. Based on this premise, this study investigates fiscal policy and its effect on poverty reduction in Nigeria from the year 1970 to 2015. The model adopted forthe study is the Auto regressive distributed lag model including the idea as regards capturing the dynamic responses of the endogenous variable caused by changes in the observed variable lags and the contemporaneous and lagged values of the other explanatory variables. The test for present of Unit root was carried out using both Augmented Dickey Fuller and Phillip Perron. The ADF result shows that all the variable were stationary at first difference while only the Overseas Development Assistance (ODA) was stationary at levels while the Phillip Perron result shows that only Other Government Revenue (OGR) and Overseas Development Assistance (ODA) was stationary at levels. The Narayan bound test co-integration test was conducted in a graphical form, following the result, there exist a long run relationship in the model. The ARDL test which comprises of the long run estimate and short run reveals that the predicted coefficients of the effective models are smaller in the short run compared to the long run estimate. Secondly, the diagnostic test shows that the fault terms of the short run models are usually allotted and are homoscedastic. Majority of the findings are revealed in the work. Based on these findings, the study recommends that there should be more focus on the use of other government revenue sources (non-tax income) in the finance of their expenditures and implementation of programmes.

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