EFFECTS OF FISCAL STRATEGY ON PRIVATE INVESTMENT IN NIGERIA

Abstract

The study analyses the effects of fiscal strategy on private investment in Nigeria. The paper adopted secondary data which was sourced from the publications of the Central Bank of Nigeria Statistical Bulletins and the National Bureau of Statistics between 1980-2015.The estimated techniques employed were the Augmented Dickey-Fuller (ADF) unit root test to affirm the stationary of the series, the Johansen Cointegration test to confirm the long run cointegration among the variables, Error Correction Model (ECM) to examine the long run and  short dynamic effects of the  fiscal variables on private investment. Also, the Granger Causality test was conducted to evaluate the dependency directions between fiscal variables and private investments. The results shows that government expenditure had positive effect on private investment in the long run ( =3115709; p while a significant negative effect exists on taxation in the short run ( =-6642058; p . The study concludes that fiscal strategy has positive significant effect on private investment in Nigeria. The study therefore recommends that government should as a matter of fact re-assess its spending to commensurate with investment and directing more credit facilities to the private sector.