Macroeconomic Effects of Fiscal Policy Changes in Nigeria

The study examines the relationship between fiscal policy and macroeconomic performance in Nigeria in the post economic crisis era. The vector autoregressive, granger causality and impulse response function estimators are employed to capture the interactions between fiscal policy and macroeconomic variables. The findings indicate that the previous values of government revenue employed in financing government expenditure have impact on macroeconomic factors except for per capita income growth. However, only money supply to the size of the Nigerian economy reported a direct relationship with total expenditure growth, where others report an indirect relation. Also, the fiscal balance growth only enhances lending rate, total trade to economic size and exchange rate, and the other two variables report otherwise. The paper submitted that fiscal policy is important to achieve better macroeconomic performance in Nigeria